FRANCE Law and Practice Contributed by: Raphaële Courtier, Sébastien de Monès, Victor Camatta and Jessica Chartier, Bredin Prat
dication of the financing concerned, hence the reluctance of the parties, particularly the lenders, to draft the documentation in French. However, as previously mentioned, even in the context of finance documentation drafted in English, it will be necessary to prepare French versions of any French law-governed security document requiring registration for perfection purposes. 2.4 Opinions Subject to necessary assumptions and qualifi- cations, legal opinions covering, on one hand, the capacity of the French obligors to enter into the finance documents to which they are a party and, on the other hand, the validity and enforce- ability in France of such finance documents, will usually be covered in legal opinions delivered by the respective counsels. The capacity opinions may be extended to cover other items such as the absence of registration duties or the absence of immunity. The practice in France is that the borrower’s counsel issues the capacity opinion while the lenders’ counsel issues the validity opinion. However, in certain circumstances, the prac- tice may vary; eg, in bonds transactions, it is not unknown for both borrower’s and lenders’ counsel to give capacity and validity opinions. Also, opining on the choice of law may be found in either capacity or validity opinions, depending on the circumstances.
by way of bonds). They can be used alone or coupled with junior financing. When used alone, senior loans are commonly seen on investment-grade (or low leveraged) transactions where they will be the only financ- ing considered for the transaction. They can be made available on a secured or non-secured basis, depending on the situation of the bor- rower. Senior loans will generally comprise several bullet and/or amortising term facilities and one revolving credit facility. The purpose of the term facilities usually consists in the financing (or refi- nancing) of the acquisition price, the refinancing of existing indebtedness (including in the target) and the financing of future capital expenditures (CapEx). They may also include the possibility of incremental facilities, which may turn out to be very useful for financing significant build-up transactions. 3.2 Mezzanine/Payment-in-Kind (PIK) Loans This type of financing is usually seen on LBO transactions as a means to increase leverage. Because of the banking monopoly, whereby only licensed credit institutions or financing compa- nies can grant loans in France and because mezzanine funds are generally not licensed in France, funding of the mezzanine tranche will typically be structured as a private bond issu- ance. Related to the mezzanine financing to the extent that it involves the same players (mez- zanine funds) and is structured in the same way (through private bonds issuances) is unitranche financing, which has met with growing success in France on the mid-cap market over recent years. Less onerous than mezzanine financing
3. Structures 3.1 Senior Loans
Senior loans are the cornerstone of any acquisi- tion financing by way of loans (as opposed to
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