FRANCE Law and Practice Contributed by: Raphaële Courtier, Sébastien de Monès, Victor Camatta and Jessica Chartier, Bredin Prat
2.2 Use of Loan Market Association (LMA) Agreements or Other Standard Loans Whether the chosen governing law is French or English law, standard agreements provided by the Loan Market Association (LMA) will usually be used as a starting point for loan financing and tailored throughout the negotiations to the specifics of the contemplated transaction. For instance, in LBO transactions, the Senior Multi- Currency Term and Revolving Facilities Agree- ment for Leveraged Acquisition Finance Trans- actions template will be used as the basis for discussion, whereas the Multi-Currency Term and Revolving Facilities Agreement will be used for investment-grade transactions, whether in the context of corporate loans or acquisition finance. It should be noted that the LMA provides French law and French language templates only for the Multi-Currency Term and Revolving Facilities Agreement (ie, investment-grade templates). However, the practice has long since adapted the English law-leveraged templates to French law and many LBO transactions are subject to finance documentation governed by French law, based on the LMA English law template. 2.3 Language In most instances, the main financing documen- tation (Facilities Agreement, Bond Terms and Conditions, Intercreditor Agreement) is drafted in English; however, given that the LMA has devel- oped French template agreements, the use of such French versions is not unknown, although mainly in the context of investment-grade trans- actions where there is only a Facilities Agree- ment, without intercreditor arrangements and mostly without security documents. It should be fair to say that, even in such a context, the use of the French language may complicate the syn-
by the ECB in June allowed market participants to initiate some LBO transactions in the large cap segment. In 2023, small and mid-cap seg- ments showed their resilience in LBO transac- tions, especially in the financial and tech sectors. A record amount of dry powder, more flexible financing conditions with lower interest rates and pressure from investors to rotate portfolios and raise liquidity may suggest a resumption of LBO transactions in 2025. The governing law will generally be chosen between French, English or US law, although the choice will necessarily depend on a number of factors pertaining to the transaction (domes- tic or cross-border transaction), the nationality of the parties at stake or the type of financing contemplated (bank loans, bonds, etc). US law will generally be the governing law in high-yield bond issuances and US Private Placement (USPP) transactions; more rarely in other types of financing. English law will almost always auto- matically be the governing law in the context of Term Loans B (TLB). 2. Documentation 2.1 Governing Law Nonetheless, if the parties choose to elect a for- eign law to govern the finance documentation, they will have to keep in mind that any security interests granted over French assets will have to be governed by French law (with some docu- ments having to be drafted in French; eg, the pledge agreements, when registration of the pledge is required).
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