SPAIN Law and Practice Contributed by: Ángel Pérez López, Luis Jiménez and Rodrigo del Saz, Uría Menéndez
However, it is not uncommon for bonds, particu- larly high-yield bonds, to be used to refinance an acquisition facility (normally structured in the form of a bridge facility). 3.5 Private Placements/Loan Notes Private placements are typical of investors who, as a result of internal policies or regulations, are obliged to invest in bonds or notes rather than loans (the concept of a loan note is alien to the Spanish market), and they are usually required to be listed (several European stock exchanges are being used for such purposes due to the flexibility and lack of bureaucracy). Bonds in general, whether private placements or otherwise, usually offer a long-term bullet repayment scheme that, on one hand, is par- ticularly attractive from the borrower’s financial perspective and, on the other hand, allows those investors to differentiate themselves from banks that require repayment calendars for long-term senior financing. 3.6 Asset-Based Financing Asset-based financing is typically used in spe- cific sectors such as aviation, logistics, shipping and real estate. In the context of acquisition finance, this type of financing is used depend- ing on the object of the acquisition, in particular in the context of asset deals, rather than share deals. One of the main advantages of acquiring the asset rather than the business is avoiding the financial assistance restriction (explained in detail in 5.5 Financial Assistance ), but transac- tion taxes or costs and security-related taxes may be higher. Asset-based acquisition financ- ing is typically secured by the relevant asset, by means of a mortgage if the asset is a real estate property, plane or ship (the type of mortgage var- ies depending on the asset) or through a pledge if the asset is composed of credit rights arising
from agreements or shares. For details on the type of security, please refer to 5. Security .
4. Intercreditor Agreements 4.1 Typical Elements
Intercreditor agreements regulate the rights and obligations of each of the lenders providing debt in the context of a relevant project. The agree- ments reached between the different classes of lenders will depend on the transaction structure, sector and Target being financed. Unlike in many other European countries, under Spanish law – and save for some exceptions ‒ the rights of lenders in the context of a syndicate are mutually independent. Thus, each lender has a separate claim against the borrower that would, in principle and unless otherwise stat- ed in the applicable legislation or the relevant finance documents, allow each lender to indi- vidually take steps to protect its rights. As this is seen as a general risk for the financing transaction, the intercreditor agreement seeks to limit lenders’ individual freedom of action and ensure that most decisions or actions taken by the lenders are appropriately co-ordinated. How- ever, it has been market standard in Spain for lenders to have the individual right to terminate and accelerate their participation in the facility upon (i) the occurrence of an event of default that is not cured, and (ii) the majority of lenders failing to accelerate the facility during an agreed term (usually one month). A lender accelerating its participation would be entitled to seek seizure of the borrower’s assets and enforce the personal guarantees, but not the security interests (which, in all cases, requires the consent of a majority of lenders). Notwithstanding the above, there is a new trend requiring the consent of a major-
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