The unitranche loan deal between IGM Resins and H.I.G. Whitehorse and Deutsche Bank has been named Deal of the Year by Private Debt Investor at the PDI Annual Awards Awards 2015. NautaDutilh's team led by David Viëtor and Marc Orval acted as counsel to H.I.G. White Horse. What made the deal stand out, according to PDI, the publication of record for the world’s private credit market, 'was neither size nor jurisdiction, but structure.'
The deal in short: borrower IGM Resins, a chemical manufacturer and distributor spanning four continents, needed a combination of term debt – a 25 million euro unitranche – and asset-backed financing, 12 million euro in secured lines. But with a complex corporate structure and assets scattered across the globe, building a deal with a complex series of intercreditor agreements took two lenders, five law firms and debt advisor Altium to get over the line.
'Capital solution for complex business situation'
The innovative aspect of this deal, David explains, 'is the fact that this deal is one of the first - maybe the first - in the Netherlands to use a financing structure in which asset-based lending exists side-by-side with unitranche lending. As there is no generally accepted market practice regarding the respective positions of asset-based lending (ABL) lenders and unitranche/ term lenders in such a structure, the deal presented the challenge of reconciling the opposite interests of these two groups of senior lenders.'
'Given the nature of their facilities, the ABL lender had an interest in flexibility and a broad range of rights and remedies while the unitranche lender's concern involved the availability of working capital and opportunities to pursue a going concern restructuring, if and when necessary. Regarding ABL/ unitranche/ term financing structure, the more traditional intercreditor approaches fall short; therefore, in this deal's intercreditor agreement we introduced an approach which gave the ABL lender the much needed flexibility, while providing the unitranche lender with as much comfort as possible.' Or as H.I.G.’s Claire Harwood, who worked on the facility, told PDI, 'it provided a capital solution for a complex business situation.'