SLOVENIA Law and Practice Contributed by: Markus Bruckmüller, Klemen Radosavljević and Matej Kraner, Wolf Theiss Attorneys-at-law
3. Structures 3.1 Senior Loans
er and less complex, based on Slovenian banks’ templates. More and more often, LMA forms are used in adapted form and subjected to local law. 2.3 Language For cross-border transactions, English is usually chosen as the language of the transaction. In contrast, local Slovenian transactions involving SMEs are usually documented in Slovenian. Certain Slovenian law governing security agree- ments, which require the form of a notarial deed, are typically concluded in the Slovenian language. Documentation that has to be submit- ted to land or commercial registries have to be submitted in Slovenian. 2.4 Opinions Legal opinions are typically required and are set as a condition precedent to the disbursement of funds in connection with a financing transaction, particularly in cross-border or larger financing transactions. Opinions typically include con- firming the authorisation and enforceability of loan documents and security documents, the formation and legal status of borrowers, guar- antors and security providers, and the absence of conflicts with corporate charters and docu- ments, applicable law and required consents or approvals. There are two types of opinions: (i) enforceability opinions which confirm the validity and enforce- ability of loan and security agreements (usually issued by lender’s legal counsel), and (ii) capac- ity opinions, which verify the existence of the borrower or guarantor, the approval of neces- sary board resolutions, and the authority of the signatory to represent the entity. (usually issued by borrower’s legal counsel).
In Slovenia, senior loans are commonly used to finance acquisitions. They typically consist of a term loan or debt securities to finance part of an acquisition, as well as a working capital facility in the form of a revolving credit facility. Term loans, debt securities and revolving credit facilities may be secured against assets by a first priority collateral; therefore, they are considered to be more secure forms of financing than sub- ordinated debt. 3.2 Mezzanine/Payment-in-Kind (PIK) Loans Mezzanine financing and pay-in-kind (PIK) instru- ments may be included in Slovenian acquisition financing structures but are less common. How- ever, due to the economic uncertainty resulting from trade policy uncertainties and geopolitical conflicts, alternative forms of financing have increased in recent years. Such financings are offered by specialised funds, usually at high interest rates. Mezzanine Financing Mezzanine financing is considered a hybrid instrument because it typically incorporates debt- and equity-like components. In a com- pany’s capital structure, it lies between equity and debt and is typically provided in the form of unsecured or subordinated loans. This asset class provides alternative financing to support the business reorganisations or expansions. Claims of mezzanine creditors may be con- tractually subordinated, usually by way of an intercreditor agreement which stipulates the relationship between mezzanine creditors and other (senior and junior) creditors.
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