Accordion Feature, Regulatory Panel, and More
Accordion features have moved from the obscure and unusual to the more common in syndicated loan transactions. The concept is to provide for an ability of a borrower group to call for an increase in the credit facilities made available based upon reaching certain triggering events. The accordion features are most frequently participatory, that is lenders can chose to participate or not when the accordion is called upon. There are some accordion features which require additional advances but lenders will resist these as it will require the necessity of having standby credit available for the increased amount, the discretionary feature of an opt-in or opt-out accordion feature will be more acceptable to most regulated financial institutions participating in a syndicate. The accordion feature which has been included in these materials is a non-compulsory accordion feature for this reason. This white paper reviews the accordion feature, as well as the regulatory panel, defaulting lenders, increasing lender responsibilities, privacy and information sharing, intercreditor-subordination mechanics, and possessory collateral.
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