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Presenting a live 90-minute webinar with interactive Q&A
Swap Documentation in Loan Transactions:
Coordinating ISDA Master Agreement
and Loan Agreement Terms Documenting Covenants, Security, Required Consents,
Voting and Control, Reporting, and Regulatory Issues
Today’s faculty features:
1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific
THURSDAY, FEBRUARY 4, 2016
Robert Scherer, Counsel, Vinson & Elkins, New York
Guy Gribov, Senior Associate, Vinson & Elkins, Houston
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SWAP DOCUMENTATION IN LOAN TRANSACTIONS
FEBRUARY 4, 2016
www.velaw.com
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Confidential and Proprietary ©2016 Vinson & Elkins LLP www.velaw.com
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1) Swap uses and risks
2) Documentation architecture
3) Integration into, and coordination with, loan
documents
4) Questions?
PROGRAM OUTLINE
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• Common definition: a contract whose value is derived
from the value of an underlying asset
• Better definition: a financial instrument used to
transfer risk
• Uses:
– Speculating
– Financing
– Hedging
• Common types:
– Futures
– Forwards
– Swaps
WHAT IS A DERIVATIVE?
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ANY RISK CAN BE TRANSFERRED
Borrower Lender $$$
Swap
Provider
fixed
%
floating %
floating
%
Example: interest rate risk
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• Credit risk
• Price risk
• Currency risk
• Basis risk
• Tax risk
• Weather risk
EXAMPLES OF OTHER RISKS THAT MAY BE
HEDGED BY BORROWERS
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• Counterparty risk
o Market risk
o Liquidity risk
• Default Risk
• Basis risk
• Legal risk
o Regulatory risk
RISKS WITHIN DERIVATIVE TRANSACTIONS
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Confidential and Proprietary ©2016 Vinson & Elkins LLP www.velaw.com
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• ISDA Master Agreement
• Schedule
• Credit Support Annex
– Paragraph 13
• Confirmation
– Definition booklets
SWAP DOCUMENTATION
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• Loan Agreement Covenants
– Indebtedness
– Liens
– Dispositions
– Hedging
– Mergers
– Reporting
• Events of Default
– Bankruptcy
– Cross Default
INTEGRATION INTO, AND COORDINATION, WITH LOAN
DOCUMENTS
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• Security
– Can swaps be secured pari passu with lenders?
– Eligible providers and counterparties
– Waterfall issues
– Release of collateral
– Guarantees
– Setoff
INTEGRATION INTO, AND COORDINATION WITH, LOAN
DOCUMENTS
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• Voting Rights
– Interests of lenders and providers may not be aligned
– Does provider have voting rights?
– Calculation of voting percentage
INTEGRATION INTO, AND COORDINATION WITH, LOAN
DOCUMENTS
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PRESENTER BIOGRAPHIES
Rob's practice focuses on the structuring, negotiation and
documentation of structured financial products and other
over-the-counter derivatives, including interest rate,
commodity, currency and credit derivatives, repurchase
agreements, forward transactions, and other financial
products. Rob also provides regulatory advice relating to
derivative products, including with respect to compliance
with the Dodd-Frank Act and rating agency criteria for
structured transactions. Rob's clients include sell-side
financial institutions, as well as a broad range of buy-side
entities such as electric utilities, oil and gas producers and
private investment firms.
ROBERT SCHERER
COUNSEL
Guy’s practice focuses on syndicated and
structured/mezzanine financings, and preferred equity
investments, primarily in the energy space. He has worked
on numerous bank financings, mezzanine and structured
financings, preferred equity investments, and convertible
debt. He represents mezzanine funds, publicly and
privately held corporate borrowers and issuers, private
equity funds, and commercial banks. Guy’s energy industry
focus includes numerous matters involving oil and gas
exploration and production, oilfield services, refining,
distribution, storage and transportation, and retail.
GUY GRIBOV
SENIOR ASSOCIATE
666 Fifth Avenue
26th Floor
New York, NY 10103-0040
212.237.0229
[email protected]
1001 Fannin Street
Suite 2500
Houston, TX 77002
713.758.3295
[email protected]
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