SPAIN Law and Practice Contributed by: Ángel Pérez López, Luis Jiménez and Rodrigo del Saz, Uría Menéndez
1. Market 1.1 Major Lender-Side Players
Depending on the nature of the target company (the “Target” ), the sector or asset, the SPV’s shareholders may be national corporations or international private equity funds with a pres- ence in Spain. However, the principles under which acquisition financing is structured remain the same regardless of the identity of the ulti- mate sponsor.
The key players on the lenders’ side remain Spanish banks. In larger transactions, a group of international banks have traditionally been very active in the Spanish lending market. However, deals involving alternative funds, debt funds, direct lenders and other non-banking lenders have continued to increase over the years, and it looks like this trend is now con- solidated in the market. The price remains mar- ginally higher, although alternative lenders are gradually offering competitive pricing that, in many cases, is not so far from banks’ prices, especially after the increase the interest rates experienced in 2023 and 2024. Agreements offered by alternative financiers tend to be covenant-lite, offering fewer restric- tions and more flexibility to borrowers – filling the gaps left by banks after the financial crisis, eg, financing the acquisition of land for real estate development, providing bridge facilities or financing high leverage acquisitions, bridge to equity and other types of hybrid financings (mezzanine, convertible, PIKs, etc). It can now be said that direct lending is here to stay and the traditional banking system is evolv- ing to accommodate and compete with these new actors. 1.2 Corporates and LBOs On the borrowers’ side, acquisition financing is normally structured through a newly incorporat- ed company, which is considered as a special- purpose vehicle (SPV) or bidco that borrows money from the lenders (without recourse to its shareholders).
2. Documentation 2.1 Governing Law
The use of Spanish law to govern both cor- porate and acquisition finance documentation has become the normal practice; only massive transactions led by large private equity firms and syndicated internationally (especially throughout European lenders) are, in some cases, governed by the laws of England and Wales. In such cas- es, when the borrower or the Target is a Span- ish entity, transactions require significant input from Spanish lawyers in many critical areas, such as corporate law (eg, financial-assistance rules, corporate benefit), insolvency regulations, conditions precedent, security packages and access to expedited enforcement procedures in Spanish courts. 2.2 Use of Loan Market Association (LMA) Agreements or Other Standard Loans The Spanish market commonly uses LMA finance documents when the facility agreement to be drafted is in English (regardless of whether the facility is governed by Spanish law or the law of England and Wales). Despite the LMA providing a Spanish-language template for a Spanish law-governed multicur- rency term and a revolving facility agreement for investment grade agreements adapted to
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