FINLAND Law and Practice Contributed by: Tarja Wist, Wist Attorneys
In purely domestic transactions, the documenta- tion would typically be in Finnish. 2.4 Opinions In finance transactions with international banks or other lenders, a legal opinion of an external Finnish counsel is usually required. A typical legal opinion would address the capacity of the borrower and other obligors to enter into the finance documents and perform their obligations thereunder, due approval and execution, and the legality, validity and enforceability of the finance documents as well as questions such as govern- ing law and jurisdiction. A Finnish legal opinion would typically be qualified by bankruptcy laws and other laws affecting creditors’ rights, includ- ing claw-back provisions of Finnish law. Critical questions in legal opinions often con- cern the scope and application of the financial assistance rules in the relevant transaction, and Finnish legal opinions tend to include a quali- fication addressing this consideration. Other typical Finnish law questions calling for specific qualifications include the borrower’s right to use its pledged bank accounts, the risks relating to deferred perfection of security interests as well as questions concerning enforceability of subor- dination provisions in intercreditor agreements. In smaller domestic transactions, legal opinions are rarely used, and banks often rely on their own knowledge of Finnish law and their own checks of the obligors’ due capacity, approval and execution of the finance documents.
the borrower subject to the completion of the acquisition transaction, the granting and perfec- tion of the agreed security and the fulfilment of other conditions precedent. Loans of a particu- larly large size would normally be syndicated. In addition to the acquisition finance facilities, senior loan facilities usually also include working capital facilities to refinance prior working capi- tal loans that terminate in connection with the acquisition. The acquisition facilities are secured by the assets of the borrower, such as the shares of the target and the borrower’s bank accounts, whereas the working capital facilities may also be secured and guaranteed by the target and its subsidiaries. Finnish M&A and acquisition finance transac- tions are typically structured to include one, two or even more special acquisition companies, often referred to as bidcos and topcos. To obtain structural seniority to other financing, the senior facility is usually raised by a bidco, as the entity closest to the target. The typical holding company acquisition struc- ture is very much a product of the restrictions that apply to upstream security and guarantees (see 5.4 Restrictions on Upstream Security , 5.5 Financial Assistance and 5.6 Other Restric- tions ) and often aims at facilitating a post-trans- action merger between the target and the bidco. While the Finnish financial assistance provisions prohibit the target from assisting the bidco in servicing the acquisition facility, the target may be merged with the bidco whereby all assets and liabilities of the target will automatically ex lege transfer to the bidco and thus become available to service the loan. Whilst the above structure is usual in acquisi- tion finance transactions where the acquirer is
3. Structures 3.1 Senior Loans
In acquisition finance, senior loans are typically fully secured loans, which are made available to
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