AUSTRALIA Trends and Developments Contributed by: Lewis Grimm, Alastair Gourlay, Dean Bao and Emily Tsoi, Jones Day
surprises are taken off the table. In particular, most Australian deals now impose strict asset transfer, investment and dividend caps, guar- antor‑coverage floors (requiring at least 85% of group EBITDA inside the security net), expanded definitions of obligors and super‑majority con- sent to create any super-priority secured debt ranking ahead of the senior lender group. Documentation is also evolving to include enhanced information rights, early warning trig- gers for incremental incurrence and express consent requirements for amendments affect- ing ranking or collateral. These provisions are now being negotiated even where the headline documentation is otherwise relatively conserva- tively drafted and many lenders in syndicated or clubbed deals are seeking “over the shoulder” reviews by their own independent counsel to ensure that the debt documents have included sufficiently robust protections. Global terms, local law: documentation convergence in practice Australia’s debt documentation landscape is increasingly shaped by global influences. Spon- sors expect the terms they have negotiated suc- cessfully in Europe and the US to be available on Australian deals. This includes the following. • EBITDA adjustments that allow for forward- looking cost savings and synergies. • Basket capacity tied to “greater of” mechanic (static dollar amount or percentage of EBIT- DA). • Ratio-based incremental facilities and MFN exceptions. • Loose definitions of permitted acquisitions and investments.
While many of these terms are now common in Australia, enforcement and insolvency contexts still require tailoring. For example: • The Personal Property Securities Act (PPSA) creates a unique regime for registering and perfecting security interests, with strict requirements around collateral descriptions and priority rules. • Security trust structures, though similar to UK trust deeds, carry unique fiduciary obligations and require bespoke drafting. • Corporate benefit and financial assistance concerns affect not only timing (via the white- wash process), but also the enforceability of guarantees and upstream security. Intercreditor agreements, though often based on LMA or NY precedent, require bespoke adap- tation to reflect local priority and enforcement regimes. While term sheets may be built on NY or LMA precedents, the end product must reflect enforceability under Australian law, particularly in insolvency, where restructuring tools like vol- untary administration and safe harbour protec- tion operate differently from Chapter 11 or UK schemes. Regulatory and tax developments: strategic considerations Recent regulatory reforms are materially affect- ing transaction planning. Global players must be aware of the following. FIRB (Foreign Investment Review Board) FIRB approval is required for foreign acquirers of certain Australian assets, particularly in sec- tors like infrastructure, energy, defence and tel- ecommunications. Timing is a key issue: while the process is becoming more predictable for straightforward transactions as a result of the more streamlined approach introduced in 2024,
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