New legislation gives European regulators the power to write-down, change the terms of, cancel, and convert into equity the liabilities (including loan commitments) of troubled European lenders.
New credit agreements typically require the borrower to consent in advance to the exercise of these sweeping powers by the regulator. What does this mean to a borrower?
What should the borrower do to protect itself? Be sure your credit agreement allows the company to remove or replace troubled European lenders. This language can be added to the “yank a bank” clause. If your credit agreement limits investments, be sure to allow this equity interest.
Patricia Lane
Milwaukee, Wisconsin
414.297.5635
plane@foley.com
Jeremy Polk
Milwaukee, Wisconsin
414.297.5617
jpolk@foley.com
Christine (Chrissy) Rittberg
Milwaukee, Wisconsin
414.319.7316
crittberg@foley.com