Syndicated facility achieved for client in a difficult climate

Key Points:

In these challenging times, it's good to hear about some success stories. Brad Allen, a Senior Associate from our debt finance team, can feel justifiably pleased about a recent matter he worked on for Leighton Holdings, one which shows the benefit of long-term relationships for all parties.

"Leighton was looking to put in place a new syndicated facility to refinance existing debt. We've worked closely with them on previous matters, so they briefed us on this matter during July this year. This was at an early stage when Leighton was putting in place a mandate for the new facility with three local banks. We were pleased to be involved at that early stage because a lawyer's ability to advance the interests of their client decreases markedly if they are only involved after all material terms of a transaction are agreed."

Was it hard to get terms favourable to Leighton in these market conditions?

"Achieving an appropriate balance between the interests of borrowers and the lenders has been especially challenging given the recent turmoil in financial markets. Some borrowers have recently been unpleasantly surprised as the facility terms required by lenders have moved quite markedly away from the terms seen in "covenant light" deals completed during the height of the boom. In contrast Leighton has taken a consistent and reasonable approach in the terms it has offered its lenders, which paid off for them now. We started working with Leighton on a set of standard terms for corporate facilities in 2006 which have been used in several previous deals and Leighton was able to close the syndicated facility on terms consistent with that standard set."

"It ended up being quite a smooth process because the three banks mandated as joint lead arrangers each had long-term relationships with Leighton so everyone was coming from a position of knowledge, not ignorance. Ultimately this syndication process - which targeted both Australian and Asian banks - resulted in a facility of A$520 million which was A$70 million in excess of the underwritten amount."