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,
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 just...