Private Equity Bulletin - LMA Update: Debt Buyback Language Published

This Bulletin considers the revised version of the LMA recommended form of facility agreement for leveraged transactions launched by the LMA on 28 September 2008 which includes provisions intended to address the issue of debt buybacks by Borrowers and related parties. The extent to which the new provisions will be included in facility agreements is a commercial issue for parties to agree. The LMA drafting raises a number of issues which are likely to be the subject of discussion.

The new provisions offer two alternative and mutually exclusive forms:

• The first version contains a prohibition on debt purchase transactions and similar transactions by members of the Borrower’s group;
• The second version permits such transaction but subject to significant restrictions.

The Bulletin sets out in more detail how these provisions work and issues that the Borrower should consider when faced with these provisions.

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Philip Snell (partner), Simon Hall (partner), Kathrine Meloni (professional support lawyer)