SWITZERLAND Law and Practice Contributed by: Daniel Haeberli and Simone Gloor, Homburger
2.3 Language English is the primary language used for syndi- cated loans. However, in certain cases, the doc- umentation may be drafted in German, French or Italian. This occurs when: • a syndicate includes smaller and more region- al Swiss banks; or • there is a local borrower who is less familiar with English language documents. 2.4 Opinions In Switzerland, it is customary for lenders’ coun- sel to be responsible for drafting the finance documentation and for providing the validity and enforceability opinion. Lenders’ counsel may also issue the capacity and due authori- sation opinion, but banks occasionally request borrowers’ counsel to be responsible for those opinion statements, especially when the borrow- ers’ counsel is advising the borrower on general corporate matters. The debt financing structure comprises a sen- ior term loan and/or high-yield notes, if any, to fund the purchase price of the acquisition on the one hand, and a revolving credit facility for the target’s working capital financing on the other hand. The senior debt may be guaranteed and/ or secured by security in the assets of the target group. Depending on the size of the acquisition and the level of the targeted leverage, the senior debt can be supplemented by any of the following: 3. Structures 3.1 Senior Loans
If a transaction is financed by a single or a small number of regional banks, the deal is typical- ly based on a short and straightforward loan agreement governed by Swiss law, usually in the language of the borrower (German, French or Italian). The documentation for larger syndi- cated loans is typically in English and follows the standard documentation provided by the Loan Market Association (LMA), which is governed by Swiss law and includes certain provisions required under Swiss law. In the case of M&A deals, the documentation is typically governed by Swiss law if the parties are located in Switzerland and financing is arranged by Swiss banks. However, transactions that can- not be syndicated in the Swiss banking market due to their size or volume, and transactions that are (additionally) financed through the issuance of high-yield notes, are customarily arranged through the London market, and the documen- tation is governed by English law. For private M&A transactions, Swiss law does not contain any requirements for “certain funds” but it is common practice to include provisions for certain funds in larger acquisitions. 2.2 Use of Loan Market Association (LMA) Agreements or Other Standard Loans The LMA’s standard documentation for the syn- dicated loan market is widely recognised and used in Switzerland for larger Swiss financing transactions. As a result, Swiss law loan docu- mentation largely follows the structure of the LMA agreements, to the extent permitted under Swiss law. Occasionally, the LMA documenta- tion receives a so-called “Swiss finish” , which differs slightly from the London market practice by compressing the scope of the LMA standard.
• second-lien loans; • mezzanine loans;
476 CHAMBERS.COM
Powered by FlippingBook