NORWAY Law and Practice Contributed by: Ida Marie Windrup, Daniel Jovanovic, Markus Nilssen and Steffen Rogstad, BAHR
3.2 Key Documentation Most transactions are documented on Loan Market Association (LMA)-based, or certainly LMA-inspired, leveraged loan agreements in English, adjusted slightly to reflect Norwegian law features such as the agency concept rather than a trust holding security. Where relevant, the rights and arrangements among different classes of creditors will typically be regulated by way of an intercreditor agreement. The documentation is often of a bespoke nature and highly tailored to the relevant lender, or even the sponsor where sponsors are active in the acquisition finance market, and are often supported by the same credit fund. 3.3 Restrictions on Foreign Direct Lenders As mentioned in 2.1 Licensing and Regulatory Approval , lending is a licensable activity. Foreign lenders are not restricted from taking security over Norwegian assets. 3.4 Use of Proceeds and Acquisition Financings There are no specific Norwegian restrictions on the use of proceeds from private credit transactions, pro - vided the underlying purpose is lawful. However, prac - tical considerations include the following: • Financial assistance rules – at the outset, Nor - wegian law prohibits companies from providing financial assistance for the acquisition of their own shares (similar to other Nordic jurisdictions), which, depending on the facts, can complicate certain acquisition financing structures. However, there are exceptions and work-arounds that may be utilised. • Corporate benefit requirements – loan proceeds must serve a legitimate corporate purpose, and directors must ensure transactions benefit the company. • Regulatory compliance – proceeds cannot be used for purposes that violate anti-money laundering, sanctions, or other regulatory requirements. Strong existing relationships between Norwegian companies and traditional banks can make it challeng - ing for private credit providers to compete on take-
and approved by the relevant ministry with sectorial competence, or the National Security Authority (NSA). The notification requirements of the Security Act apply equally to foreign and Norwegian investors. Currently, the Security Act requires notifications of acquisitions of a qualified ownership interest in companies which have been individually classified as important to basic national functions or national security (“Designated Companies”) by a decision of a ministry or the NSA. A qualified ownership interest is defined as one third of the ownership instruments or votes of the Designated Company, or the right to become owner of one third of such ownership instruments or votes or otherwise exercise significant influence over the Designated Company. After the remaining provisions of the legis - lative amendments have come into force, the qualified ownership interest threshold will be lowered to 10% of the ownership instruments or votes of the Designated Company. 2.4 Compliance and Reporting Requirements See 2.2 Regulators of Private Credit Funds and 2.3 There are no restrictions on club lending in Norway, and antitrust regulators are not focused on private credit. 3. Structuring and Documentation 3.1 Common Structures Private credit transactions in Norway are generally structured as direct lending arrangements. Restrictions on Foreign Investments . 2.5 Club Lending and Antitrust When private credit providers enter the Norwegian market, they most commonly do so through uni - tranche structures or senior secured-term loan facili - ties. Private credit providers offer both capex facili - ties and delayed draw facilities in Norway. Capex and delayed draw facilities are generally structured with similar terms to the main loan facility, although pricing may differ. Revolving credit facilities are less common, except where a bank is involved, although some larger private credit funds do provide revolving credit facilities.
195 CHAMBERS.COM
Powered by FlippingBook