How foreign private equity sponsors and their lenders are finding solutions to local law structuring issues -

Leveraged finance acquisitions have existed in the Israeli market for many years. However, for a variety of reasons, the financings of these transactions have faced structuring challenges mainly in relation to the credit support granted by the target group. Many transactions, in particular with corporate sponsors, were secured on the target’s shares with recourse to the sponsor, and required a relatively large portion of equity — the result of local Israeli banks traditionally supporting levels of leverage lower than those foreign banks have typically supported. With an increasing amount of acquisitions in Israel by foreign private equity sponsors, structures are being challenged in an effort to maximize leverage (with limited recourse to the sponsor, as is the trend in Europe and the US), and consequently, to maximize the value of the security package, to get US and European lenders across the line.