WYKUP KREDYTOWANY SPÓŁKI (LBO) - PROBLEMY Z DŁUGIEM
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Date
2003
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Wydział Prawa i Administracji UAM
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LEVERAGED BUY-OUT (LBO)
Abstract
This paper deals with a special kind of company takeover called Leveraged Buy-Out
(LBO). The main characteristic of this type of transaction is a very low amount of own capital
and a great deal of external funds used by investors in order to finance the takeover.
This paper aims to systematize the legal aspects of LBOs in Poland, particularly those
involved in securing external funds before the transaction and servicing the debt after taking
control of the target company. The legal discussion of those aspects is strongly placed in the
financial context and is also based on the author’s practical experiences.
At the beginning the focus is put on the essence of the problem, the terminology and the
successive steps of a typical LBO transaction. Furthermore, the issues of securing external financing
are discussed. In particular, the author pays heed to the possibilities of securing the
loan by the target company in the light of article 345 of the Polish Company Law Act (equivalent
of art. 23 of 2nd Directive of EC Council) and some other legal limitations. Subsequently,
the author touches upon the issues related to debt servicing after a LBO. Discussion is
presented of debt incorporation into the target company, or alternatively, methods of relevant
funds transfer from the target company for the repayment of the loan drawn earlier in order
to finance the takeover. In this context, special emphasis is put upon the rights of minority
shareholders and the protection of creditors.
Key words: Leverages Buy-Out (LBO), mergers and acquisitions, debt security, protection
of creditors.
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Citation
Ruch Prawniczy, Ekonomiczny i Socjologiczny 65, 2003, z. 1, s. 107-128
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0035-9629