SWEDEN Law and Practice Contributed by: Magnus Wennerhorn and Victor Bengtson, Linklaters
have large investor commitments to deploy, so when the market stabilises and sellers are willing to put assets on sale, M&A activity is expected to rise quickly.
ers involved, the financing structure, and market practice. 2.2 Use of Loan Market Association (LMA) Agreements or Other Standard Loans LMA templates are the dominant choice in Swedish leveraged finance, as they offer con- sistency and clarity for international and local transactions. • LMA agreements: typically employed for senior facilities and revolving credit facili- ties, especially in LBOs or acquisition finance transactions involving PE sponsors or mul- tiple lenders. These may be governed by Eng- lish or Swedish law. • Other agreements: Swedish law-governed loan agreements are sometimes used for smaller corporate loans or smaller domestic acquisitions. In these cases, the documenta- tion may be simplified. • Nordic-style LMA: as a mix between the two previously-mentioned agreements, there is a type of documentation which is referred to by local PE sponsors and banks as a Nordic- style LMA-based document. In practice, this is a shorter version of the leveraged LMA template. 2.3 Language Loan agreements for cross-border transactions governed by LMA standards are typically drafted in English. In a very limited number of cases, documents may be prepared in Swedish, but all major stakeholders are proficient in English, and English is accepted market wide. 2.4 Opinions Legal opinions are critical in Swedish acquisition finance transactions to confirm enforceability, capacity, and regulatory compliance.
2. Documentation 2.1 Governing Law
The governing law for corporate loans, acqui- sition finance and LBOs in Sweden can differ based on the transaction’s parties and location. • Corporate loans: Swedish law is commonly used for straightforward domestic corpo- rate loans, reflecting the local nature of the relationship between borrowers and lenders. In some larger financings where the lender group includes a large number of international banks, English law is dominant. • Acquisition finance/LBOs: historically, mid- size deals and above adopted English law as their governing law. Today, many mid-size deals are done under Swedish law while all larger transactions are governed by English law. More of the mid-size deals are governed by English law when international players are involved, larger PE sponsors often have a London-based relationship with interna- tional banks and credit funds and run their negotiations through London-based borrower teams. The trend over the years is that both international banks and credit funds are more comfortable with Swedish law as the govern- ing law of the documentation, despite a larger variety of court precedents under English law that give a more detailed guidance to the interpretation of certain concepts and situa- tions. Ultimately, governing law choices depend on the preferred location of the PE sponsor, the lend-
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