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Covenants Change Of Control Outline

LLM Law Outlines > Corporate Bonds and Credit Agreement Outlines

This is an extract of our Covenants Change Of Control document, which we sell as part of our Corporate Bonds and Credit Agreement Outlines collection written by the top tier of NYU School Of Law students.

The following is a more accessble plain text extract of the PDF sample above, taken from our Corporate Bonds and Credit Agreement Outlines. Due to the challenges of extracting text from PDFs, it will have odd formatting:

IV. Covenants - H. Change of Control
H. Change of Control
Freeport-McMoran Indenture, Section 4.08
BMS Indenture, Section 13.01-13.05
Petrohawk Indenture, Section 4.11
FMC Credit Agreement, Section 7.01(k)
McMahan v. Wherehouse Entertainment, 900 F.2d 576 (1990) (P. #1)
San Antonio Fire & Police Pension Fund v. Amylin, (P. #1)
Change of Control Covenants [Class 25]
- Structure: Put right upon defined "change of control" trigger

Similar to Asset Sale (also put right/Offer)
o Similar to Merger and Asset Sale (overlapping triggers)
- Definition to trigger varies among indentures

Convertible versus regular

Base trigger

Rating Decline trigger
- Trigger

Cash Merger
 Is this a functional change in control?
 Why do bondholder care?
 Is it a trigger? BMS, FM
o Stock Merger
 Same Questions
 What if merger structured as triangular merger with Subsidiary of
Company merging with XYZ?
o Change in Board/Management
- Case Law: McMahan

Literal accuracy can be misleading

Makes life hard for lawyers
- Note the term "change of control" doesn't necessarily mean actual change of control
- But would give Bondholder a put right
- Rationale: company can do what it wants but bondholders are protected by the put right
BMS 4.05 Control by Majority
- "Holders of a majority in Principal Amount of the outstanding Securities may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it…"
- Non-convertible bond: effect of the change on the credit volume
- A "Fundamental Change" means

(ii) any transaction with all Common Stock is exchanged into something other than listed stock  bondholder would get put right
 Rationale: BMS's stock is volatile and liquid  good for bondholder

Important event that may have no/ positive/ negative effect

1

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