FRANCE Law and Practice Contributed by: Arnaud Fromion, Frédéric Guilloux and Pierre-Benoît Pabot du Châtelard, Clifford Chance
certain private credit providers and banks, which have not been successful. It is more common to see structures with super senior RCF provided by banks under a separate credit agreement at the level of the issuer with usual super senior intercreditor arrangements or structurally senior RCF baskets included in the documents. For super senior revolving facilities, the French market also uses the corresponding LMA forms. 3.3 Restrictions on Foreign Direct Lenders As mentioned in 2.1 Licensing and Regulatory Approval , under the French banking monopoly principle, no person other than a credit estab - lishment (licensed lending institution) is allowed to carry on banking transactions in France on a habitual basis. As a result, private debt lenders, whether French or foreigners, are not entitled to make loans available to French borrowers, and make their funds available through an issue of bonds, unless they benefit from a specific exemption to be transferred participations under the relevant financing. Regarding collateral, there is no restriction for foreign debt lenders to take the benefit of secu - rity over assets located in France. 3.4 Use of Proceeds and Acquisition Financings There are no particular restrictions that differ from those imposed on other types of acquisi - tion financing (eg, financial assistance, corpo - rate benefit, misuse of corporate assets, etc). When it comes to take private transactions, the only real obstacle is a practical one, linked to the potential need to be able to mobilise additional
committed funding on a daily basis to settle ten - dered shares. Therefore, unless the take private transaction features a centralised purchase set - tlement process, the delays for mobilising funds in a private credit lender are simply not compat - ible with daily funding requirements. However, the authors have seen a number of transactions where a short-term bank facility (such as an overdraft) served as a bridge to a medium-term private debt financing component. Another obstacle, of a legal nature, is that the sponsor bank ( banque présentatrice ) of the take private offer is required by law to guarantee to the holders of targeted shares – or other securi - ties – that they will be paid their purchase price in the event that they contribute such securities to the offer, whether voluntarily or pursuant to any mandatory squeeze-out mechanism. Gener - ally, the sponsor bank will obtain a counter-guar - antee from the acquisition finance providers, but a debt fund would not be permitted to provide such a guarantee (due to the banking monopoly restrictions mentioned earlier). In practice how - ever, the sponsor bank would generally resort to obtaining collateral directly from the offeror. 3.5 Debt Buyback Debt buybacks by the sponsor (but not the bor - rower) are permitted in France in private credit transactions, hence the willingness for private credit funds to limit such ability (through a maxi - mum threshold) in order not to have to deal with the sponsor, acting as creditor, in an insolvency scenario). 3.6 Recent Legal and Commercial Developments See comments in 3.2 Key Documentation on the 2017 reform (the retail regime). Certain recent changes to legal documentation have raised concerns amongst certain practitioners
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