RE: KEFI PROJECT FINANCING CLOSING IN3 Apr 2022 00:29
Portfolio..
I am now ‘down under’ but previously worked as a senior lender for a Fortune 500 bank in Europe, essentially putting the debt piece into mostly PE sponsored buy-side M&A deals.
The process typically crystallises with an Indication of Terms (IOT), being a term sheet issued by the lender/s which, whilst not legally binding, is board ratified and does constitute a genuine, perceived, deliverable funding structure.
This is subject to asset valuation, due diligence (DD) financial due diligence (FDD) an underwriting process and then full/final credit and board approval and sign off.
A Formal Offer is then provided, being time-bombed (typically 3 months) and conditional in two respects;
Conditions Precedent (CP’s) - these are conditions which must be met prior to funding, and are typically linked to the deal structure and other parties. It is typically “sight of and satisfaction with..” type stuff, and putting right anything that the DD process flagged as needing improvement etc.
Conditions Subsequent (CS’s) - these are more around tidying up post deal close and don’t hold up funding. They are important tho, in terms of maintaining covenants going forward.
It is not totally clear where Kefi are at in this process, as the language has been a little hazy. I don’t think this is deliberate, more an attempt to publish something that most will understand.
My belief is that by now (with eyes on a mid year completion) there will be an offer of facilities in play from the two senior lenders and they will be busy with all parties in satisfying the conditions precedent.
Typically, with more than one senior lender involved, a lead bank will undertake this process (with oversight from the other/s) and will then provide the debt funding in full at completion. There is then typically an agreed “sell down” process sometime after completion which syndicates the senior debt. Put another way.. shares the risk.
For me, the thing that will take the time here is getting all parties on the same hymn sheet legally.
Remember that every party to this deal (public and private) will have their own counsel, with their own agenda’s of what they need in order to get comfortable prior to closure.
There are many moving parts to this syndicate and this is always the bit that drags at the end… hence everyone normally gets ****ed up at the completion dinner, through a combination of exhaustion and relief.
Hope this clarifies.
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