Parties and Players Flashcards
Accredited Investor
This refers to people and entities that are permitted to buy Securities in a Private Placement. The term covers virtually all types of institutions that are participants in the private placement market, and also includes people who are either rich or sophisticated.
Administrator
A licensed UK Insolvency practitioner (usually an accountant) who is appointed by the court, the company’s directors or by certain qualifying Secured Parties for the purposes of an Administration.
Affiliate
Defined slightly differently in different types of agreements and jurisdictions, but generally refers to a subsidiary, corporation, partnership or other person controlling, controlled by or under common control with another entity.
Agent
A generic term that is usually used to describe the Facility Agent, but may also be a reference to any of the following: Security Agent, Documentation Agent, Syndication Agent, Paying Agent, Transfer Agent or Registrar.
Angel Investor
An investor (usually an affluent individual as opposed to a corporation) that provides capital for a business start-up, usually in exchange for Preference Shares, convertible debt or Equity ownership.
Arranger
The bank or financial institution that “arranges” (alone or with other co-Arrangers) a Facility by negotiating original terms with the Borrower and Syndicating the facility to a larger group of Lenders. An Arranger generally has no ongoing obligations under a Facility Agreement after the Closing Date. Also used to describe the bank taking the lead on arranging an EMTN or GMTN Programme.
Audit Committee
A committee of the board of directors of a company that oversees a company’s audit, control and financial reporting functions.
Authorised Person
A person who is authorised for the purposes of FSMA to carry out a regulated activity.
B&D / Billing & Delivery
The lead Initial Purchaser, Manager or Underwriter that is responsible for collecting money from investors at Pricing and delivering the money to the Issuer (and collecting the fees on behalf of the Initial Purchasers, Managers or Underwriters) at Closing. The B&D Initial Purchaser, Manager or Underwriter will also help with the process of clearing the Securities through the relevant Clearing System and will have to sign some certificates from the Closing Memorandum.
Beneficial Owner
If you have the power to vote or dispose of a particular Security, either individually or as part of a group acting in concert, then you are probably the Beneficial Owner of that Security.
Bidco
The name typically given to the SPV established by a Sponsor as the acquiring entity in a Leveraged Buyout or by a corporation in a takeover. Usually Bidco will be the main Borrower in acquisition-related Facilities.
Bondholder
A holder of a Bond.
Bookrunner
In the loan world, the Arranger who runs the Book during Syndication and determines what portion of a Facility will be allocated to each potential Lender. The Bookrunner should not be confused with the Syndication Agent for a particular Facility. Similarly, the Bookrunner in a Securities offering manages the marketing efforts and determines what portion of the offering will be allocated to each potential investor. See Lead Manager.
Borrower
A company that borrows under a Facility Agreement
Broker-Dealers
Entities that have to register with the SEC, the FCA or another applicable regulatory authority because they trade Securities for themselves or on behalf of others.
Chargee
Another name for a Secured Party
Chargor
A company or person (usually a Borrower or Guarantor) who grants a Charge or other Security Interest in favour of the applicable Secured Parties pursuant to a Security Agreement. Also known as a Pledgor.
Class
Lenders holding a particular “class” or Tranche of Term Loans or Revolving Loans.
Co-Comm
Slang for a Coordinating Committee, usually in a restructuring or workout process.
Co-Lead Manager
A Manager who participates in some of the obligations of the Lead Manager, but who is not a Bookrunner of the Securities.
Co-Manager
A Manager who is not a Bookrunner of the Securities and does not typically have any principal obligations in the documentation of the issue but is included in the Syndicate because of its ability to place the Securities.
Common Depository
For notes issued in CGN form, the depositary bank is called a Common Depositary and is often the same entity as the Fiscal Agent or Principal Paying Agent.
Common Safekeeper
If notes are issued in NGN form, the depositary bank is called the Common Safekeeper who holds the NGN in safekeeping and is usually one of the ICSDs or the common service provider. Also known as the CSK.
Concert Party
A person or group of persons acting together to achieve a common or shared goal. See Acting in Concert.
Coordinating Committee
Used in restructurings, in particular where the Syndicate is large. The Coordinating Committee acts as the interface between the Borrower and the Lenders, looking to agree the terms of a restructuring. Members typically include the largest debt holders in the Syndicate. Their leader is known as the Coordinator. The Coordinating Committee can’t bind the rest of the Lenders. Also known as a Creditors Committee or Steering Committee.
Coordinator
The lead institution on the Coordinating Committee.
Creditors Committee
In the restructuring context, see Coordinating Committee. A quite separate Creditors Committee may also be established in formal Insolvency proceedings, as in the case of English Administration or liquidation proceedings. Here the committee is intended to be representative of the general body of creditors, with consultation and (in liquidation) certain approval rights in respect of various matters.
CREST Shareholder
A shareholder holding his/her shares or Securities electronically within CREST, whose name appears on the company’s shareholder register as the legal owner of those Securities, with entitlement to all rights and benefits attached.
CSK
Common Safekeeper.
Custodian
A financial institution holding Securities in safekeeping for a client either as part of an issue of Securities or generally.
Dealer
An investment bank agreeing to act for an Issuer under a MTN Programme in respect of the Issuer’s issues of Notes but without any upfront underwriting or subscription commitment.
Defaulting Lender
The name used to describe a Lender that fails to fund, rescinds the Facility Agreement or related documentation, or becomes subject to Insolvency proceedings. The consequences of becoming a Defaulting Lender vary between Facility Agreements but can include loss of entitlement to any Commitment Fee, inability to vote on amendments and Waivers and/or being caught by a Yank-a-Bank.
Direct Participant
Each Bondholder who is shown in the records of the Clearing Systems as a holder of Securities.
Distressed Debt Fund
An investor that only looks to purchase Distressed Debt.
Documentation Agent
A title often granted to a Lender who takes a large portion of a loan commitment in the Syndication process. The position generally does not require any actions or entail any responsibilities (or warrant additional fees!). Essentially, it is a means for a Lender to get its name on the cover of a Facility Agreement and receive League Table Credit. Not overly common in Europe.
Facility Agent
The bank that serves as the principal Agent administering the Facilities in the Facility Agreement. The Facility Agent is responsible for processing Interest payments to Lenders, posting notices delivered by the Borrower and acting as the primary representative of the Lenders under a Facility Agreement in dealings with the Borrower. The Facility Agent is often also the same entity as the Security Agent, but wearing another hat.
Fallen Angel
Can refer to (i) the Issuer of a Bond that was once Investment Grade but has since been reduced to Junk Bond status or (ii) a stock that has fallen substantially from its all-time highs.
Finance Subsidiary
A company (known colloquially as “Finco”) primarily used by a parent company to raise money, usually in the context of a Notes offering. The proceeds of the Notes are advanced to the parent or to the parent’s Operating Subsidiaries.
Financial Buyer
Generally, a Sponsor that is acquiring a company as an investment rather than to achieve strategic Synergies. Compare Strategic Buyer.
Fiscal Agent
A bank appointed by the Issuer and any Guarantor to carry out payments and other administrative duties in relation to the Securities. A Fiscal Agent is used where there is no Trustee and the role is identical to that performed by a Principal Paying Agent. The Fiscal Agent is the agent of the Issuer and owes no fiduciary duties to the Bondholders in the way that a Trustee would.
Foreign Private Issuers
Certain Issuers of Securities in the United States (other than a foreign government) organised in a jurisdiction outside of the United States. Foreign Private Issuers are treated differently than US domestic Issuers in several important respects, including the types of Financial Statements they are required to file with the SEC.
FPI
Foreign Private Issuer
Fronting Bank
Usually a reference to a bank that “fronts” a Loan for other Lenders. This may be due to practical reasons (e.g., the real Lender was unable to complete KYC in time for Closing or that all of the Lenders would have been required to be present before a notary at Closing) or legal reasons (e.g., as a result of the French Banking Monopoly restrictions or Italian regulatory requirements). Whilst in most instances the Fronting Bank arrangements will be temporary and the Fronting Bank will transfer its position to the real Lender shortly after Closing, in some instances a Fronting Bank will remain in place for the entirety of the financing, such as in an IBLOR structure. The Fronting Bank may receive a fee for its role.
Fulcrum Creditors
In a restructuring, Creditors whose claims are neither completely In the Money nor completely Out of the Money, i.e., in a distribution of assets they would only get partially repaid.
Guarantor
Subsidiaries, parent entities or sister companies that Guarantee the debt incurred by the Issuer/Borrower. The Senior Secured Facilities and the Mezzanine Facility / Bridge Facilities will usually have the same Guarantors. Generally, at least in LBO financings, Facilities are Guaranteed by all Material Subsidiaries and any other subsidiaries needed to ensure compliance with any Guarantor Coverage Test.
Hedge Counterparties
The providers of the Hedges required by the Hedging Strategy Letter. The Hedge Counterparties will typically benefit from the same Collateral and Guarantees granted to the Lenders of the First Lien Facilities on a Pari Passu basis.
Holdco
Another name for Holding Company.
Holdco Guarantor
any parent entity of an Issuer/Borrower that acts as a Guarantor of the Borrower’s or Issuer’s debt.
Holding Company
A company that sits on top of (or “holds” the Equity of) the Subsidiary that is below it. This concept sometimes connotes a company that does nothing else (i.e., has no operations). Bidcos are often Holding Companies and financing documentation will often contain a Negative Covenant preventing Bidco and other Holding Companies from doing anything other than entering into the transaction documents and otherwise providing customary holding company services.
Impaired Agent
Similar to the Defaulting Lender concept but for Facility Agents (i.e., a Facility Agent that fails to fund, rescinds the Facility Agreement or related documentation or becomes subject to Insolvency proceedings). The concept has become more common in Facility Agreements since Lehman Brothers, among others, went bust, as it allows the Facility Agent to be replaced without its consent or signature required (thereby removing the practical problems seen when Borrowers and Lenders wanted to replace Lehman Brothers or others as Facility Agent) and allows the Borrower and Lenders to make payments other than through the Facility Agent (which you don’t want to do if it is in Insolvency).
Initial Purchasers
In a Rule 144A Offering and Regulation S offering, Initial Purchasers play essentially the same role that Underwriters play in a registered transaction. Rule 144A provides a resale exemption from the registration requirements of the US Securities Act, permitting the investment banks that initially purchase the Securities from the Issuer in a Section 4(a)(2) offering to resell to big institutions (known as QIBs) without being deemed to be Underwriters under Section 2(a)(11) of the US Securities Act. Since we can’t call them Underwriters, we call them Initial Purchasers.
Institutional Investor
An organisation engaged in investing its own assets and assets held for others, e.g., insurance companies and pension funds.
Instructing Group
A name given to the group of creditors entitled under an Intercreditor Agreement to give instructions to the Security Agent. The Instructing Group may vary from time to time depending on the classes of debt remaining in the structure.
Investment Company
Generally, a company whose main business is holding Securities of other companies purely for investment purposes. As defined in the US Investment Company Act, an Investment Company is (i) engaged primarily in the business of investing, reinvesting or trading in Securities (or holds itself out as being in that business); (ii) owns “investment Securities” which constitute more than 40% of the value of its assets on an unconsolidated basis (excluding US government Securities and cash items) and (iii) is not entitled to any exemption from registration. A typical example of an Investment Company is a mutual fund, which is an entity organised to accept money or assets from investors, pool those assets and invest the assets on behalf of the investors.
