GREECE Law and Practice Contributed by: Panagiotis (Notis) Sardelas, Matina Kagkelari and Aris Sifakis, Sardelas Petsa Law Firm
3.8 Payment in Kind/Amortisation The Company Law explicitly permits PIK structures for bond loans; however, their use is still infrequent and largely restricted to complex debt restructurings. While traditional banks primarily provide amortising loans, bullet repayments are common in bond loans. 3.9 Call Protection Market practice for bond loans typically provides for an issuer call option in the bond programme, sub - ject to a make-whole provision during the first 12 to 18 months following issuance, and thereafter a call price above par under a declining premium schedule, ensuring that lenders achieve a minimum guaranteed return prior to any refinancing at a lower cost. The tax treatment of payments depends on the type of the credit and the lender as well as on the specific terms of the credit agreements. Under the Greek Income Tax Code (Greek Law 4172/2013, as in force), payments of loan principal are not subject to withholding tax (WHT), whereas interest payments to non-resident providers are generally sub - ject to a 15% WHT, unless reduced or eliminated by a double taxation treaty. Interest paid to credit institu - tions (Greek or foreign branches) is generally exempt from WHT. 4. Tax Considerations 4.1 Withholding Tax While interest on standard corporate bond loans often attracts the 15% rate, if the bonds are listed on a regulated market or a multilateral trading facility (MTF) within the EU or on a recognised exchange elsewhere, non-resident bondholders are exempt from WHT; resi - dent bondholders who are natural persons (individu - als) are subject to WHT at a rate of 5% (with effect from 11 April 2025). 4.2 Other Taxes, Duties, Charges or Tax Considerations Effective 1 December 2024, stamp duty was replaced by the digital transaction duty (DTD). For loans between legal entities, the rate is 2.4% on the princi - pal amount. DTD is capped at EUR150,000 per loan
These often restrict the borrower or its affiliates from purchasing debt unless they waive certain rights, such as voting at bondholder meetings, to prevent the bor - rower from controlling the creditor group’s decisions. Sponsors typically face fewer direct statutory restric - tions than the borrower when conducting a buyback. However, they are often required to participate as a guarantor in the underlying credit, which they may resist due to their own internal by-laws or fund-level liability restrictions. Additionally, to manage conflicts of interest, Greek credit agreements include clauses that strip the sponsor of voting rights on any repur - chased debt to prevent them from controlling creditor decisions. 3.6 Recent Legal and Commercial Developments Please refer to 3.2 Key Documentation . 3.7 Junior and Hybrid Capital Owing to the dominance of traditional bank financing, junior and hybrid instruments remain alternative solu - tions, primarily reserved for highly leveraged transac - tions, major infrastructure projects or complex M&A scenarios. Documentation for junior and hybrid deals is far more bespoke than standard senior bank loans. Junior capi - tal – usually via bond loans – relies on intercreditor agreements for subordination, carries higher pricing and offers flexible covenants. Hybrid instruments – mezzanine or preferred equity – are highly specialised and often used in start-up acquisitions or distressed restructurings, and may include PIK interest and equi - ty kickers, giving lenders upside participation rarely seen in traditional Greek bank lending. In Greece, holding company (HoldCo) deals are typi - cally secured. The most common form of collateral involves pledge of shares in subsidiaries, which are the primary sources of value and cash flow. Lenders may also seek guarantees from the operating com - panies (OpCos), intercompany loans, or assignments of future cash flows such as dividends. Additionally, other forms of collateral – such as real estate, receiv - ables, or intellectual property held by subsidiaries – may be included.
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