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Private equity financing—debt

The vast majority of funds for a traditional private equity buyout will be sourced from debt, rather than equity, finance.Unlike a buyout, a venture or development capital investment will rarely have a significant debt component to the investment structure.Types of debt and debt providersDebt in the context of a buyout refers to debt finance raised from financial institutions such as banks, pension funds, insurance funds, hedge funds or other financial institutions, eg leveraged loan funds, mandated to invest in debt.These financiers will generally be third party investors not otherwise connected with the transaction, rather than the private equity investor or management.The type of debt they provide is debt in the traditional sense, rather than the hybrid, quasi-debt or debt instruments, eg preference shares or loan notes, which form part of the equity investment by the private equity investor or management.Debt is generally categorised as either senior debt or junior debt. Senior debt is usually in the form of a term loan of a principal sum (sometimes in tranches) and, often,...

Bridge to bond facilities

Bridge to bond facilities What are they? A bridge to bond facility is a type of acquisition financing where the buyer requires the certainty of a fully committed financing package, but which is intended to be replaced in the future with a mid- to long-term financing in the form of high yield bonds. In markets where acquisitions typically do not have a financing condition, a bridge financing package (which is available to be drawn if necessary) is often a key component to a successful bid. This Practice Note focuses on bridge to high yield bond financing. However, investment-grade borrowers also commonly use bridge facilities for acquisitions. Bridge commitments for investment-grade borrowers differ in many ways, including: lower pricing, much less restrictive covenants (the terms often follow the borrower’s existing credit facilities) and the securities demand mechanic may not be included (or if included, it may only be triggered by ratings downgrade). Bridge commitments for investment grade borrowers may also have longer maturities (or extension rights exercisable by...

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Ireland—Deductions from wages

Ireland—Deductions from wages Introduction This Precedent can be used where an employer wishes to make a deduction from an employee’s wages. The accompanying guidance notes provide instructions on the legal requirements and best practices to ensure compliance with Irish employment law. When are deductions permitted? Where an employer wishes to make a deduction from an employee’s wages, the employee must consent to this in writing or it must be required by law. Section 5(1) of the Payment of Wages Act 1991 (Ireland) (PWA 1991 (IRL)) states: • 5.—(1) An employer shall not make a deduction from the wages of an employee (or receive any payment from an employee) unless— • (a) the deduction (or payment) is required or authorised to be made by virtue of any statute or any instrument made under statute, • (b) the deduction (or payment) is required or authorised to be made by virtue of a term of the employee's contract of employment included in the contract before, and in force at the time...