Facility Agreement Cps

April 9, 2021

In order to give officials a lead to implement the modification of their more than 600 buildings, CPS is proposing to the Board of Education, at its monthly meeting on Wednesday, an extension of its contracts with Aramark and Sodexo for a one-year amount of $180 million. With the extension, all CPS agreements with the two contracting parties will expire on June 30, 2021. In the public wholesale market, this is not a problem, as the provision of long-term documents to support an offer remains the norm. The situation may be different in the European private LBO market for large funds, where a formal letter of commitment is increasingly common to deal with this risk, rather than requiring a fully executed loan contract. This letter of commitment usually adds a detailed worksheet that could be more than 100 pages long and sets out all the conditions that remain to be met before funding is available (as well as credit committee approval, etc.). To the extent that the delivery of documents is a condition, the letter of commitment generally indicates, line by line, the (confirmed) status of these CPs. It may allow a certain degree of “Wiggle-Room” given the early stage of supply and therefore the number of potentially mobile parts. A separate CP status letter can be used to report on the status. This may include bidco Group security, business approvals and legal advice, as well as commercial CPs such as due diligence materials, modeling and, of course, the BSG. All these points must be negotiated in a short period of time.

Some fund clauses – which limit the number of provisions in a leveraged loan contract that can be used by a lender to refuse to finance an acquisition – are not new. The emergence of these clauses can be traced back to the public procurement of mergers: in the United Kingdom, the City Code on Takeovers and Mergers (the “Code”) requires that a bidder can only announce an offer if it is guaranteed that it is able to meet all the cash consideration requirements relating to this offer and takes all appropriate measures to ensure the implementation of any other type of consideration. A financial advisor must also confirm that the bidder has financing to pay and complete the purchase price of the acquisition. To obtain such confirmation, the financial advisor requires that any financing by borrowing be provided on a “defined fund basis,” which means that it must not be subject to financial conditions independent of the bidder`s control, with an administrative authorization decree. A creditor may also require the bidder to provide a short-term, short-term interim credit contract to support the offer. The objective is to fill all the gaps that may arise from the letter of commitment, which contains an agreement, to negotiate in good faith all the conditions that are not contained in the description sheet in the long-form documentation. The idea is that if disagreements were to arise in the full documentation – which would be very unlikely given the detailed terms already agreed and the inertia of the reputation of the conclusion of the agreement – the short-term loan could be invited to complete the acquisition (the sponsor would leave the “bridge financing” to ease the burden).

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