FRANCE Law and Practice Contributed by: Fernand Arsanios, Delphine Guillotte, Guillaume Chaboureau, Houda Idaroussi and El Sayegh, King & Spalding
ed). This requires consent from the borrower, the existing lender and the new lender. • Assignment of agreement (cession de contrat) an existing lender assigns its status as party to the loan agreement to a new lender. It requires the consent of the borrower, the existing lender and the new lender. In practice, facility agreements often contain provi- sions whereby the borrower gives standing consent to or acknowledges transfers (or certain transfers) made by the lenders when such consent or acknowledge- ment is required. Under French law, security interests and guarantees (excluding autonomous guarantees, ie, guarantees that are independent obligations unaffected by the underlying debtor obligations) are considered ancillary to the secured claims and any assignment of receiva- bles automatically includes the transfer of all ancillary rights. Consequently, when a loan is transferred by way of an assignment of receivables, the associated security package is also transferred to the assignee. Conversely, finance documentation typically includes the express consent of security providers and guaran- tors for the transfer of security interests and guaran- tees in the event of a secured loan being transferred through assignment of agreement or novation. 3.7 Debt Buyback French regulation does not restrict debt buybacks. In practice, the question of debt buybacks is addressed contractually in the finance documentation. Such transactions are generally contractually prohibited or restricted by the parties, and accompanied, in some cases, by disenfranchising provisions stating that the borrower or financial sponsor (or other affiliates) can- not participate in the decision-making by the lenders. 3.8 Public Acquisition Finance French laws and regulations applicable to public acquisition transactions require that: • the tender offer is filed with the French Autorités des marchés financiers, or AMF (the competent authority for supervising public takeover bids), by one or several financial services providers (pre-
stataires de services d’investissement) known as presenting bank(s) (banque(s) présentatrice(s)) on behalf of the offeror; and • at least one of the presenting banks (which will be called the “guaranteeing bank” ( banque garante )) guarantees the content and irrevocable nature of the commitment of the offeror, which means that the guaranteeing bank will pay any portion of the purchase price which the offeror fails to pay. Upon such payment, the guaranteeing bank will hold a right of recourse against the offeror. Consequently, the guaranteeing banks will require the following protection mechanism to be provided in the loan agreement: • a strong and certain funds provision for draw- downs made by the offeror – ie, subject only to the absence of (i) major events of default; (ii) change of control; (iii) illegality; and subject to all major repre- sentations being correct; • a direct right for the guaranteeing banks to request a drawdown of the loan where they have not received evidence that the offeror has effected this in a timely manner, or if the drawdown requested by the offeror is not made available; and • a guarantee from the financing banks securing the payment of all sums due by the offeror to the guar- anteeing banks under their right of recourse. It should be noted that: • the guaranteeing bank will usually request that their direct drawdown right is only subject to no change of control or illegality; and • any payment by the financing banks in favour of the guaranteeing banks under the guarantee is deemed to be a drawdown under the loan. In practice, the filing of the tender offer takes place by way of a letter addressed to the AMF signed by the guaranteeing banks. This letter is accompanied by a draft offer document ( note d’information ) outlining the key terms of the offer and its financing structure. While the offer document is made publicly available, the underlying financing documentation remains con- fidential.
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