NEW ZEALAND Law and Practice Contributed by: David Weavers, Alex MacDuff, Matt Consedine and Verniel Virtucio, Russell McVeagh
it is not carried on for the dominant purpose of lessening competition between them. This exception is highly technical, and lenders oper - ating in New Zealand should seek legal advice to ensure that the exception applies for any par - ticular transaction. As a general rule, lenders engaging in club or syndicated lending in New Zealand need to be careful about pricing and borrower information exchanged with competitors. At a minimum, a comprehensive confidentiality agreement setting out the information that may be disclosed, with whom, and for what purpose, should be put in place with all potential co-lenders before sharing any information. Certain New Zealand-specific provisions are typically included in New Zealand syndicated facility agreements in relation to New Zealand competition laws. 3. Structuring and Documentation 3.1 Common Structures Common deal structures for private credit can • a private credit fund participating in a sen - ior syndicated/club facility alongside banks and/or other funds; deals of this nature have become more common due to increased distress levels, making a solely bank refinanc - ing unattainable for some borrowers; these transactions also offer an attractive deploy - ment opportunity for newly established New Zealand-based funds; • a European-style unitranche, usually with a super-senior RCF provided by a bank; and • mezzanine debt that is either: take the following form: • a bilateral senior loan;
(a) contractually subordinated to senior debt; or (b) structurally subordinated holdco debt. Private credit providers prefer drawn term debt with no amortisation. That said, delayed-draw term facilities for future acquisitions and/or capex are often made available, usually for bor - rowers backed by sponsors and where there is a clear growth path. Private credit providers are less likely to provide revolving facilities and, as a result, unitranche loans tend to be coupled with super-senior revolving facilities provided by a bank. Covenant-lite transactions in the style of term loan Bs are rare (but not unheard of) in New Zea - land. 3.2 Key Documentation The Asia Pacific Loan Market Association (APL - MA, the equivalent of the Loan Market Associa - tion in the Asia-Pacific region) has produced a suite of standard-form documents that are appli - cable for use in the Australasian market. The APLMA forms are becoming more commonly used for investment-grade transactions, but less so for leveraged buy-outs (where sponsor- friendly precedents tend to be used) and mid- market transactions. For transactions that involve different classes of creditors, an LMA-style intercreditor agree - ment will be needed. A market precedent form of intercreditor for unitranche/super senior revolving credit facility (ssRCF) transactions has developed organically over the last few years. For other transactions, there is no clear market precedent.
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