easy · Debt Capital Markets primary-issuance-syndication
In a 'club deal', the 'Agreement Among Lenders' or similar documentation is important because:
- It lets the lead arranger unilaterally cancel scheduled interest when the borrower is a 'good friend'.
- It mandates that the outstanding bonds must automatically convert into equity once the issuer's price rises.
- It defines how the group of banks will share the interest, principal, and any voting rights over the debt.
- It guarantees that the club's bonds can always be freely sold onward to retail investors at any time the lenders wish.
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