A fiducie can receive assets already pledged and thereby accommodate new and historical lenders, with the possibility to define subordinations, waterfalls and reprofile cash flows to secure the transaction in an adequate manner.
The borrower has already several debts, secured by assets or not, and on different terms.
New borrowing can be difficult in light of conflicting clauses, existing covenants and lack of unpledged assets.
All lenders are accommodated through the same scheme in a non conflicting manner (collateral, maturities, waterfall, cash flows…).
The borrower benefits from a new financing and has consolidated the totality of its debt in a sustainable way.
Comfort of the borrower
Retains the use of its assets, including its availability for a potential sale (subject to the agreement from the lender).
Optimize its capacity to leverage its assets.
Accesses a new class of lenders, shouldering on the robustness of the fiducie, and secure financing that banks would have normally shunned.
Avoids negative tax implications found in other asset-backed financings (e.g. sale & lease-back).
Maintains accounting and tax treatment associated with the asset (depreciation & amortization, time allowance on capital gain, revenues,…).
Predefines, in agreement with the lender and the trustee, terms and conditions of the sale of the asset in case of default (price, time frame, buyers, exclusions,…).
Protection of the lenders
Appropriately secures lenders.
Organize debt restructuring in good conditions.
Reduce distortions and conflicts amongst lenders.
Reinforces the quality of the pledges.
In mutual agreement proceedings, aligns the interests of financial and non financial creditors.
Defines the terms and condition of potential future borrowing.
Reinforces the strength of the pledges, especially in the case of insolvency proceedings, owing to a convention de mise a disposition generating revenues allocated to the payment of the debt.
Control of the assets and of their value through time by the trustee.
Protective LTV based on the quality of the assets and its cash flow generation.