Amend and extend

Amend and extend (A&E) is the renegotiation of an existing loan with the same lenders to push back its maturity by amendment. The debt stays in place. The borrower avoids the cost and uncertainty of a full refinancing with new lenders. A&E transactions became more frequent in the private debt market in 2024, when new financing was scarce. In return for the extension, lenders ask for revised commercial terms: a new margin or new margin ratchet steps, a prepayment protection period that restarts from the date of the amendment, reduced capacity for additional debt, additional guarantees and security, revised covenant levels when new debt is added, an amendment fee. When the company has junior or competing debt, the senior lenders ask for an automatic early maturity clause (springing maturity) that protects them against subordination in time. The borrower, for its part, seeks terms more flexible than those of the original agreement. Some documentation contains a clause known as snooze you lose, which treats a lender’s silence as consent to the amendment; lenders watch for it in term sheets. For a company that owes €20m to €300m, an A&E is prepared before the maturity falls within one year and the debt appears in current liabilities.

A services group has €140m of unitranche debt maturing in 2027. It obtains from its two lending funds an extension to 2030, in exchange for a margin increase of 0.75 percentage point, a 1% amendment fee and a new twelve-month non-call period.

• The margin increase and the amendment fee requested in exchange for the extension.
• The starting point of the new prepayment protection period.
• The revision of the covenants and of the capacity for additional debt.
• The snooze you lose clause and the lender majority required for the amendment.