AUSTRIA Law and Practice Contributed by: Philipp Baubin and Stefan Weber, Weber & Co
tions, the parties usually use the recommended LMA standards. The documentation in Austrian transactions is often based on the LMA structure and content but implements certain particularities required for the specific situation, usually with a reduced scope compared to the LMA standard. As each transaction is unique to a certain extent, the par- ties typically introduce modifications and tailor the standard documentation in line with the spe- cifics of the particular transaction. 2.3 Language There is basically no requirement under Austrian law to choose a particular language in the loan documentation. The choice of documentation language in acquisition financing transactions mostly depends on the parties involved. Smaller domestic transactions, in which the borrower is a less internationally-oriented company with lit- tle international exposure and the lenders are Austrian and/or German banks, are usually doc- umented in German. However, domestic lenders are also tending to increasingly document transactions in English as this is either required by the lenders involved (eg, as they are international lenders or need to increase flexibility in terms of international syn- dication) or facilitate a later review of the relevant documentation on an international level (eg, in the case of international investors stepping in
• the existence and capacity of the Austrian parties involved on the borrower side (Aus- trian borrowers, guarantors and security pro- viders), including whether all necessary board resolutions have been passed and that the signatory of the agreements has the corre- sponding power of representation (a so-called capacity opinion); and • the validity, effectiveness and enforceability of the relevant agreements (loan agreement, intercreditor agreement, security agreements (a so-called enforceability opinion). The market standard in Austria is that the capac- ity opinion is issued by borrower counsel and the enforceability opinion by lender counsel. Depending on the requirements of the trans- action, additional expert opinions may have to be obtained to confirm the tax treatment of the acquisition finance transaction and ensure that the structure does not expose the borrower or lenders to unexpected tax liabilities (a tax opin- ion). In Austrian acquisition finance, senior loans are the most important debt instrument. The instru- ment is typically structured to ensure robust lender protection while complying with local legal and tax requirements. The structure depends on the size and complexity of the transaction but certain elements are consistently used across all deals. Senior debt is also ranked higher than other debt components in the capital structure, such as mezzanine facilities, high-yield debts or hybrid instruments. In the event of liquidation, senior 3. Structures 3.1 Senior Loans
at a later point). 2.4 Opinions
In acquisition finance transactions, legal opin- ions play a crucial role in ensuring that the lenders have clarity on the legal aspects of the transaction. Austrian legal opinions in acquisi- tion financing transactions usually cover:
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