NORWAY Law and Practice Contributed by: Ida Marie Windrup, Daniel Jovanovic, Markus Nilssen and Steffen Rogstad, BAHR
3.8 Payment in Kind/Amortisation Payment in kind private debt and amortisation are both seen in Norway. Cash payment is more com - mon than payment in kind. 3.9 Call Protection Call protection in Norwegian private credit trans - actions typically includes make-whole provisions, prepayment premiums and/or non-call periods. Norwegian call protection tends to be more borrow - er-friendly, reflecting the competitive banking market and borrowers’ expectations of refinancing flexibility. Private credit providers typically negotiate two to three years of meaningful call protection to ensure accept - able returns. Norway levies a 15% withholding tax on certain outbound interest payments made from Norwegian debtors to related parties resident in low-tax jurisdic - tions (namely, where the effective taxation is lower than two thirds of what it would have been had the foreign entity (lender) been resident in Norway). There is a general exemption for lenders that are genuinely established and carry out genuine economic activity within the EEA. There is currently no proposal to impose withhold - ing taxes on interest payments made to non-related (third-party) lenders. 4.2 Other Taxes, Duties, Charges or Tax Considerations Norway is considered a creditor-friendly jurisdiction in terms of costs. The withholding tax legislation does not apply to ordinary third-party lenders, and the expenses associated with obtaining security in Nor - way are minimal, being limited to nominal registration fees. Additionally, there are no stamp fees or duties for lenders that are calculated based on the loan amount or the value of the underlying asset. 4.3 Tax Concerns for Foreign Lenders 4. Tax Considerations 4.1 Withholding Tax Foreign private credit lenders should check whether they fall within the scope of the withholding tax regime
private transactions and other acquisition financings, particularly in the case of established businesses. 3.5 Debt Buyback Debt buybacks by the borrower or sponsor are gen - erally permitted in Norwegian private credit transac - tions, subject to contractual and legal limitations. In practice, the key limitation is typically contractual rather than legal, with loan documentation governing whether, when and how debt buybacks may occur. Lenders often negotiate for restrictions to prevent opportunistic buybacks at discounted prices or to maintain syndicate cohesion. 3.6 Recent Legal and Commercial Developments As private credit becomes more established in Nor - way, documentation is evolving to reflect market standards and market practice in established markets. 3.7 Junior and Hybrid Capital The Norwegian market for junior and hybrid capi - tal from private credit providers remains relatively underdeveloped compared to more mature markets, although activity has increased in recent years. Jun - ior capital can either be contractually or structurally subordinated. Junior and hybrid capital is typically provided through: • Mezzanine debt – subordinated loans with higher pricing that often include equity participation through warrants or equity kickers. • Unitranche facilities – single-tranche debt combin - ing senior and junior elements with blended pric - ing, though less common in Norway than in the US or UK. • Second lien debt – secured debt ranking behind first lien senior facilities. • PIK (payment-in-kind) debt – allows interest to be capitalised rather than paid in cash; often used in leveraged transactions. • HoldCo financings – secured or unsecured debt at HoldCo level which is structurally subordinated to debt at the operating company/group level. These financings sometimes receive sponsor support.
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