Practices: Commercial Lending

As a financial institution, whether a national or international bank or a regional lender, you face complex and sometimes conflicting demands. You have to offer innovative financing vehicles to stay ahead of the competition – exercise fiduciary responsibility to safeguard financial security – and incorporate regulatory and economic policies into everyday business transactions. You don’t just need a lawyer; you need skilled advisors with creative insight on how best to meet your responsibilities.

Gaining Credit Access

Whether you’re an established multinational corporation or an emerging entrepreneurial business, your growth depends on access to credit for everything from capital equipment purchases to acquisitions. Your goal is to secure the lowest cost financing available, while making sure that the details of credit structure, documentation and payment terms are properly handled. And you want to make sure that any debt financing deal you enter doesn’t create problems later if you seek to tap the equity markets.

Meeting Your Needs

Ungaretti & Harris knows how to meet the needs of lenders and borrowers. The transactional middle market – deals of $10 million to $800 million – is where we excel. We can quickly grasp the basics of your lending transaction, develop the most cost-effective structure, and solve any problems along the way. Whether you’re a lender or a borrower, we understand what you want and help you achieve it. Our lawyers don’t play legal games – we get the deal done.

We advise our financial institution clients as lenders, issuers, underwriters, credit enhancers and servicers, and have a proven ability to handle complex, innovative transactions, as well as the routine transaction where controlling costs is essential. On the borrower side we have experience helping companies from a wide range of industries, such as utilities, medical device manufacturers, REITs, and gaming, in securing on- and off-balance sheet loans, recapitalizations, and various credit facilities. Many private equity investors turn to us for acquisition financing and investment syndication.

Financial Industry Experience

As advisers on transactional work, our lawyers work with you to handle the documentation and negotiation of loans, letters of credit, asset-based financing, syndications, special purpose financing and all other commercial finance lending. You get advice on all aspects of lender due diligence to evaluate risks and balance business, operational and legal needs. You also get the advantages of a solid reputation for closing deals, strengthened by access to the firm’s full resources in tax, securities, employee benefits, real estate, environmental and corporate law.

Transactional Breadth

Having sat on both sides of the table, our lawyers have a clear understanding of how to protect the lender’s interests within a borrower’s comfort level on a wide range of transactions, including:

Revolving loans and term loans.
Revolving and term-loan packages.
Multiple borrower transactions.
Loan participations and acquisition loans
Letters of credit facilities.
Special purpose loans.

Because these transactions can be used for a wide range of purposes – merger and acquisition funding, recapitalization, investment syndication, asset purchases and leases, standby letters of credit, and more – we make sure that you meet all the requirements of the Uniform Commercial Code and proper collateral protection in the event of default or bankruptcy. Typical of the complex transactions in which we have represented lenders are:

Negotiating a credit facility involving a senior term loan and revolving loan secured by assets of various borrowers located in Mexico, Canada, China and the Netherlands.
Structuring a secured loan with a term loan and revolving credit facility.
Negotiating a reimbursement agreement for issuing a standby letter of credit.
Structuring term and revolving credit facilities.
Syndicating loans for utilities.
Refinancing a term loan and revolving credit facility.

Mezzanine Financing

Mezzanine transactions – where a senior lender makes the lending transaction and subordinates a position in it to an intermediate, or mezzanine, lender – are an area where we have special focus. Ungaretti & Harris has represented mezzanine lenders in negotiating their position with the senior lender, and have been particularly effective at documenting “equity kicker” arrangements in which the mezzanine lender gets an additional equity position in the borrower in return for their participation in the loan. Such kickers involve significant tax and contingent payment issues, and require the unique combination of securities and commercial lending knowledge that we have developed. Mezzanine lenders are often middle-market financial institutions, and we ensure that their rights and interests are protected in dealing with the larger senior lenders.

Documentation Efficiency

As a lender, what you want most from a law firm is the ability to protect your interests in a transaction, to make the deal as straightforward and seamless as possible, and to strengthen your business relationship with the borrower. Middle-market lenders that do not have their own preferred lending documents have found integrated secured loan forms from Ungaretti & Harris to be a tremendous tool that enhances their effectiveness. Reflecting years of experience working with large national and international lenders, these forms include:

Loan and security agreements, guarantees and notes.
Stock pledge agreements.
Subordination agreements.
Intercreditor agreements.
Reimbursement agreements for letters of credit.
Standard closing document checklists.

These forms are in plain English so that both sides of the deal understand their responsibilities. They can be customized with terms and provisions that benefit the lender and the borrower, and that build in safeguards that protect the lender’s collateral in the event of default, foreclosure or bankruptcy.

Borrower Innovation

For borrowers, we excel at lending transactions that combine a number of unique transactional features. Regulated industries, such as utilities, are impacted by a number of special financing requirements that we fully understand. If other lenders are involved, we are skilled at crafting intercreditor or subordination agreements. And we can ensure that you get adequate capital no matter what your need – acquisitions, recapitalizations, stock redemptions, off-balance sheet construction loans and more. We have helped borrowers refinance existing credit facilities, and secure asset-based loans on a wide range of collateral: mineral rights, intellectual property, royalty asset streams, franchised restaurants, and railroad rolling stock.

Private Equity Lending

Private equity investors need ready access to capital in order to complete their portfolio transactions, and our leadership in middle-market private equity and commercial lending relationships creates the funding flexibility that gets deals done. Because our representation focuses on the private equity borrower side, both for investors and for portfolio companies, we have the experience to facilitate even the most complex lending transactions, such as:

Negotiating acquisition and investment financing, including a senior creditor syndicate led by Royal Bank of Scotland and a mezzanine investor group led by CitiGroup.
Refinancing an entire corporate equity structure in connection with a subsidiary merger involving a national leader in healthcare receivables management.
Completing a leveraged recapitalization of a portfolio company.
Conducting a private placement of limited liability company interests to provide equity capital for a real estate investment.

Such lending transactions typically are in the $10 million to $500 million range, and involve private equity investors focusing on medical equipment companies, technology investments, and manufacturing and distribution operations.

Skill and Creativity

Successful commercial lending transactions aren’t just about money. Getting the deal done takes skill and creativity, often in the face of conflicting lender and borrower needs. In the commercial lending middle market, we are more than just lawyers – we play the role of skilled advisors who can help all parties reach their objectives.