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Mezzanine Loan Agreement for Switzerland

Mezzanine Loan Agreement Template for Switzerland

A Swiss law-governed Mezzanine Loan Agreement is a sophisticated financing instrument that provides for subordinated debt financing with equity-like features, typically sitting between senior debt and equity in the capital structure. The agreement, governed by Swiss law and particularly the Swiss Code of Obligations, establishes the terms for a hybrid form of financing that often includes both debt and equity characteristics, such as higher interest rates compared to senior debt and potential equity conversion rights. The document details the loan terms, security package, subordination provisions, conversion mechanics, and includes specific Swiss law requirements regarding security interests and enforcement.

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Mezzanine Loan Agreement

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What is a Mezzanine Loan Agreement?

The Mezzanine Loan Agreement under Swiss law is utilized when companies require financing that bridges the gap between senior debt and equity financing. This sophisticated agreement is particularly relevant for growth capital, acquisition financing, or real estate development where traditional bank financing may be insufficient. The document establishes the terms of a hybrid financing instrument that typically offers higher returns for lenders through increased interest rates and potential equity participation, while providing borrowers with more flexible terms than senior debt. The agreement must comply with Swiss legal requirements, particularly the Swiss Code of Obligations and financial market regulations, and includes detailed provisions on security interests, subordination to senior debt, potential equity conversion rights, and enforcement mechanisms. This type of financing is especially valuable when companies need to optimize their capital structure without immediately diluting existing shareholders.

What sections should be included in a Mezzanine Loan Agreement?

1. Parties: Identification of the borrower, lender(s), and any guarantors or security providers

2. Background: Context of the transaction, including the purpose of the loan and its relationship to senior debt

3. Definitions and Interpretation: Comprehensive definitions of terms used throughout the agreement and interpretation rules

4. The Facility: Details of the loan amount, purpose, and availability period

5. Interest and Fees: Interest calculation, payment dates, default interest, and all applicable fees

6. Repayment and Prepayment: Terms for scheduled repayment, mandatory and voluntary prepayment provisions

7. Conversion Rights: Terms and conditions for converting the mezzanine debt to equity, including trigger events and conversion price

8. Ranking and Subordination: Priority position of the mezzanine debt in relation to senior debt and equity

9. Security: Description of security package and enforcement rights

10. Representations and Warranties: Standard and transaction-specific representations and warranties

11. Covenants: Financial and operational covenants, including information requirements

12. Events of Default: Circumstances constituting default and consequences

13. Changes to Parties: Transfer and assignment provisions

14. Administration: Payment mechanics, calculations, and notices

15. Governing Law and Jurisdiction: Choice of Swiss law and jurisdiction provisions

What sections are optional to include in a Mezzanine Loan Agreement?

1. Accordion Feature: Optional section for when the facility includes the possibility of increasing the loan amount

2. PIK Interest Provisions: Details of payment-in-kind interest if applicable to the transaction

3. Agent Provisions: Required when there are multiple lenders requiring an agent to act on their behalf

4. Intercreditor Provisions: Detailed provisions regarding the relationship with senior lenders, if not covered in a separate intercreditor agreement

5. Warrants: If the mezzanine financing includes warrant coverage

6. Tax Gross-Up and Indemnities: Detailed tax provisions if cross-border elements are involved

7. Currency Provisions: Required for multi-currency facilities

8. Board Observer Rights: If the mezzanine lender is granted board observation rights

What schedules should be included in a Mezzanine Loan Agreement?

1. Conditions Precedent: List of required documents and conditions to be satisfied before drawdown

2. Form of Drawdown Request: Template for borrower to request loan disbursement

3. Calculation of Interest: Detailed methodology for interest calculations

4. Form of Transfer Certificate: Template for transferring loan participations

5. Security Documents: Forms of security agreements and guarantees

6. Financial Covenants: Detailed calculations and definitions for financial covenants

7. Conversion Mechanics: Detailed procedures and formulas for debt-to-equity conversion

8. Disclosure Schedule: Borrower's disclosures against representations and warranties

9. Existing Indebtedness: Schedule of borrower's existing debt obligations

10. Corporate Structure: Group structure chart and ownership information

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Switzerland

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions





















































































Clauses












































Relevant Industries

Real Estate Development

Private Equity

Manufacturing

Technology

Healthcare

Infrastructure

Renewable Energy

Hospitality

Retail

Commercial Real Estate

Industrial

Financial Services

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Corporate Development

Investment

Credit

Real Estate Finance

Capital Markets

Corporate Finance

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Legal Counsel

Corporate Lawyer

Investment Manager

Private Equity Director

Real Estate Finance Manager

Debt Fund Manager

Risk Manager

Corporate Development Director

Investment Banker

Relationship Manager

Credit Analyst

Compliance Officer

Transaction Manager

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks, 聽Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination, 聽Severance Pay, Governing Law, Entire Agreemen

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