The LPNs have the benefit of change of control clause if Russia ceases to own or control (directly or indirectly) in excess of 50% of voting shares,
negative pledge clauses and certain restrictions on mergers, acquisitions and disposals.
(53) Indeed, much of the value in Professors Adler and Kahan's proposal to enforce negative pledge clauses against future creditors can be attained by granting the early creditor a security interest.
For example, they would restrict the enforceability of covenants, such as a negative pledge clause, to relatively sophisticated lenders who later make material investments and who would likely screen the debtor for other risk factors such as cash flow, credit record, and asset ownership.
The notes are subject to standard change of control, cross-default and
negative pledge clauses.
The use of exit consents worked well in Ecuador in 2000, where exiting bondholders agreed to remove cross-default and
negative pledge clauses. (3) Moreover, an exchange could be encouraged by a one-time financial enhancement from the official sector.
It is difficult to generalize about such so-called
negative pledge clauses because they are heavily negotiated and customized to the needs of the parties.
However, a loan with an assignment of export proceeds could have achieved the same purpose and, in the case of the UBS/BPOI facility, the main reason for electing the pre-payment structure was actually to circumvent
negative pledge clauses present in other Angolan transactions which prevented Sonangol from assigning its right to receivables from oil contracts.
The LPNs will have the benefit of change of control clause if Russia ceases to own or control (directly or indirectly) in excess of 50% of voting shares,
negative pledge clauses and certain restrictions on mergers, acquisitions and disposals.