Mission Statement

The Intercreditor and Structure Working Group will foster an exchange of ideas among investors, bankers, lawyers and other participants regarding intercreditor principles and provisions and financing structures for European high yield bond transactions. In particular, the group will work closely with advisers to senior lenders to foster a better understanding among all participants of the needs and concerns of different creditors and of issuers and to harmonize practice for transactions with similar structures. The goals are to ensure high yield bond investors are appropriately protected and to make the high yield bond offering process more efficient and transparent.

Agenda

The working group will initially divide into subgroups.

Intercreditor Subgroup Agenda and Members:

• Formulating and disseminating an agreed set of intercreditor principles based on current market standards for the most typical capital structures. These principles would ideally be referred to by market participants and transactions could be designated as "EHYA compliant".
• Discussing the feasibility of contractual subordination only for European high yield (per the U.S. model), including why this works for mezzanine debt but has not historically for high yield. A closer alignment of high yield and mezzanine intercreditor principles may be considered.
• Discussing concerns with the LMA and other groups representing senior lenders, as well as bridge lenders and trustees.

Structure Subgroup Agenda and Members:

• Reviewing the ratings assignment process and working with the ratings agencies to address their concerns, including with respect to legal limitations on upstream credit support.
• Reviewing current disclosure practices in offering memoranda regarding structures and their limitations and evaluating whether meaningful changes could be recommended, such as to the structure chart in the summary "box" and risk factors.