Drop-Down Financings in Today’s Market (Volume 40, Number 8–August 2024)
Author: Adam L. Shpeen.; Jon Finelli.; Timothy H. Oyen.
Source: Volume 40, Number 08, August 2024 , pp.75-83(9)
Abstract:
Over the past several years, drop-down financing transactions have become increasingly prevalent in the debt markets. Such transactions can offer distressed companies an alternative financing option and provide new money lenders with structurally senior claims on a borrower’s assets. Drop-down financing structures are continually evolving, and new variations, such as the so called “pari-plus” and “double-dip” structures, have attracted attention recently. This article provides an overview of drop-down financing structures and discusses some of the common documentation terms that are often implicated by such financings.Keywords: Out-of-Court Liability Management Transactions (“LMTs”); “J. Crew Trapdoor”; Unrestricted Subsidiary; Lender Participation; “Covenant-Lite” Loan Documentation
Affiliations:
1: Davis Polk & Wardwell LLP; 2: Davis Polk; 3: Davis Polk.