Will anyone use it?

Author: | Published: 1 Dec 2009

It has long been the case that the most complicated (and least standardised) document in a complex leveraged financing is the intercreditor agreement, rather than any of the facility agreements.

As LBO structures took on more tiers of debt and market developments resulted in new provisions, intercreditor agreements became more and more elaborate (and different private equity houses effectively developed their own standard form). It was, therefore, far from automatic that the Loan Market Association (LMA) would produce a standard form intercreditor agreement to complement its standard form leveraged facility agreement – and perfectly understandable that it took it so long.

When it did, despite the multiple health warnings in the accompanying Users Guide as to the potential unsuitability of the precedent and the need – in every case – to tailor it to the particular structure and the commercially agreed position, the draft was greeted unenthusiastically by one section...