Banking and Finance Lawyer: Structured, Syndicated and Leveraged Financings
Alphard Law's finance practice is led by Galina Petrova, partner, business lawyer at the Paris Bar, whose experience was built at the New York firm Kramer Levin Naftalis & Frankel and then at the British firm Simmons & Simmons. The firm advises banks, debt funds and corporates on corporate financings, leveraged acquisition financings and structured or syndicated facilities, in French and in English, with the support of a dedicated tax practice on the questions that drive the real cost of a financing.
Documentation is the craft
A financing lives or dies in its documents. We draft and negotiate the full contractual package: the mandate letter and term sheet setting the architecture of the deal, the facility agreement and its financial covenants, the intercreditor and subordination agreement ranking the creditors, and the security documentation, pledges over securities accounts, pledges of shares in French limited companies, pledges of business assets, and assignments and pledges of receivables. That documentation determines the borrower's room for manoeuvre throughout the life of the facility and the lender's real position if things go wrong: it is negotiated clause by clause, anticipating stress scenarios rather than the base case alone.
Our work
Acquisition finance and LBOs. Structuring of acquisition debt, senior, mezzanine and unitranche, architecture of cash-up flows, covenants and events of default, refinancings and restructurings of existing debt, in conjunction with our mergers and acquisitions practice, which leads the overall transaction.
Structured and syndicated financings. Multi-lender transactions, syndication documentation, the role and liabilities of the agent, transfer and assignment provisions, asset-backed financings.
Corporate financing. Corporate facilities, working capital and development lines, capital expenditure financing, renegotiation of terms and management of covenant breach situations.
Security and guarantees. Creation, registration and release of security interests and personal guarantees, review of their effectiveness in insolvency, and coordination of French and foreign security packages in cross-border financings.
Where tax changes the cost of a financing
Three questions determine the real cost of a financing and belong to tax. The deductibility of financial expenses, constrained by the interest limitation rules applicable to companies and by the specific rules governing intra-group financing. Withholding tax on interest paid to a foreign lender, whose elimination depends on the applicable tax treaty and on the lender's status as beneficial owner. And the treatment of cash-up flows within an acquisition structure, which governs the actual capacity to service the debt. The firm handles these questions within the same matter as the documentation, which avoids the common situation where a financing architecture cleared on the legal side reveals its tax cost after signing.
Our method
The firm's partners negotiate and draft themselves, with no intermediate layer, allowing response times compatible with transaction timetables. We work interchangeably in French, English and Bulgarian, and act regularly on transactions involving parties from several jurisdictions. Our positioning suits mid-sized transactions, where the direct involvement of partners trained in international business law firms is a tangible advantage.
Frequently asked questions
What documents make up an acquisition financing?
Typically a mandate letter and term sheet setting the architecture, a facility agreement detailing drawdown conditions, financial covenants and events of default, an intercreditor and subordination agreement where several ranks of debt coexist, and a security package over the target's shares, assets and receivables. Depending on the deal, hedging agreements and comfort letters are added. Each of these documents binds the borrower for the life of the facility.
What happens if a covenant is breached?
The facility agreement sets out the consequences, ranging from a mere notification obligation to acceleration of the debt, with remedy periods and renegotiation mechanisms in between. That is precisely why these clauses must be negotiated with stress scenarios in mind: a covenant set too tightly turns a temporary difficulty into a contractual default. In practice, an early renegotiation with the lender almost always produces a better outcome than a recorded default.
Is interest paid to a foreign lender subject to French withholding tax?
It depends on the lender's status, its country of residence and the applicable tax treaty, most treaties concluded by France reducing or eliminating withholding on interest for the beneficial owner. Beneficial ownership is precisely one of the points on which the French tax authority focuses in intra-group financing structures. The question must be settled before signing, as it affects the net cost of the financing.
Do you act for lenders or for borrowers?
For both, depending on the matter: banks and debt funds on one side, corporates and sponsor borrowers on the other. That dual perspective is an asset in negotiation, since it gives concrete knowledge of the positions each side can realistically concede.
Do you work in English on international transactions?
Yes. Finance documentation is frequently drafted in English, including on French transactions, and the partner leading the practice works interchangeably in French, English and Bulgarian, with the experience of Anglo-American market documentation gained at Kramer Levin and Simmons & Simmons.
Are you structuring or negotiating a financing? Contact Alphard Law for a confidential initial discussion.