SPAIN Law and Practice Contributed by: Ángel Pérez López, Luis Jiménez and Rodrigo del Saz, Uría Menéndez
Spanish law, it is only used sporadically. Lend- ers often prefer to use drafts based on Spanish law firms’ templates and adapted to the relevant transaction by the counsel. However, many of the customary features of Spanish acquisition financing documentation are influenced or based on LMA standards, since the financing industry demands such standardisation. In addition, despite not being used for a particu- lar transaction, when there is a deadlock on a specific point in a negotiation, it is quite common to invoke the LMA as the standard in order to find common ground and reach a compromise. 2.3 Language In large transactions, there is an increasing ten- dency to draft the facility agreements in English, either because non-Spanish financing entities are becoming part of the syndicate or because the borrower’s sponsor being a non-Spanish entity or fund demands it. However, an agreement drafted in English, either governed by Spanish law or by the laws of Eng- land and Wales, also has its downsides, because a Spanish sworn translation (regular transla- tions are also admitted, but may be challenged in court) attached to the security documents is required for the purposes of initiating litigation in Spanish courts. Ancillary agreements, such as the security pack- age, are occasionally drafted in a two-column (Spanish and English) format so that the agree- ment signed by the parties contains the Spanish text approved by the parties in the event that proceedings are initiated before Spanish courts or are simply drafted and executed in Spanish. The latter is the most common approach since
Spanish drafting is mandatory for the registra- tion of mortgages and pledges without displace- ment with the relevant registry, as explained in 5. Security . 2.4 Opinions The lenders’ counsel issues an opinion on the legality, validity, enforceability and binding nature of the finance documents, while the borrower’s counsel is usually required to issue an opinion on the capacity, authority, incorporation and non- insolvency of the borrower and other obligors. Senior facilities generally consist of a variety of lending mechanisms, such as term loans, revolv- ing loans, ancillary facilities, letters of credit and guarantees. Acquisition finance transactions in Spain are similar to those in other continental European countries, although some particularities of Span- ish law influence the structure of the transaction and the finance documents. 3. Structures 3.1 Senior Loans They are structured through the lending of funds to SPVs for the purposes of partially financing the share capital of a Target or a specific asset purchase price. Acquisition finance ‒ structured as a different and separate tranche ‒ may also be partially used to refinance the Target’s existing debt by on-lending or contributing the funds to the Tar- get. Among senior facilities, lenders often pro- vide a facility for the working capital needs of the Target or its group companies. Alternatively, ancillary facilities permitted under senior facility agreements are provided by syndicate mem-
441 CHAMBERS.COM
Powered by FlippingBook