The trend towards structural flex provisions in high yield documents is creating headaches for trustees, according to a Clifford Chance partner.
But other problems can be avoided by consulting the trustee about the practical aspects of various provisions.
Increasingly, structural flex provisions are built into transactions to allow the structure to vary, by trustee consent, in certain circumstances.
Esther Cavett, a partner at Clifford Chance in London, said that the increasing structural flex requires trustees and security agents to have certainty and limited to no discretion on varying the structure.
If investors want to flex commercial terms after close and the terms are fully articulated on day one, there is no need for the trustee to have to exercise this discretion, said Cavett.
However this is not always the case. “I’ve seen a number of transactions in recent months … where the sponsor and company had to discuss not...