x
FX deal-contingent hedging for a European corporate
Case studies

FX deal-contingent hedging for a European corporate

Background
  • European corporate with a large EURUSD exposure linked to a cross boarder acquisition (US target)
  • Due to a large currency mismatch between sources and uses, the company had a significant FX risk from signing to closing (several months)
  • Deal is subject to several customary conditions (antitrust and others)
Our Approach
  • Structure a Deal Contingent FX forward with a ratchet mechanism to accommodate a large range of potential closing dates
  • Conduct an independent assessment of the contingencies and pricing associated
  • Introduce new banks outside of the M&A and/or financing banks
  • Assist with the due diligence process, on-boarding, KYC and trade confirmations review/negotiations
  • Conduct an auction process with selected banks and assist with live implementation
Benefits
  • A cost efficient solution that does not lead to break cost in case the transaction doesn’t close
  • Highly attractive pricing outcome similar to private-to-private transactions as a result of an efficient due diligence process and the introduction of additional banks known for their Deal Contingent capabilities
  • Very favourable legal terms negotiated in the trade documentation
  • Significant time, money and personnel resource savings for the client due to an efficiently run implementation process
 

More Private Equity case studies

Case studies
Stakeholder management for syndicated LBO
Private Equity August 2018
Case studies
FX deal-contingent hedging for a large PE fund
Private Equity August 2018
Case studies
Interest rate hedging for a privately owned company
Private Equity June 2018

Contact us

If you need hedging or debt advice or would like to speak about how we could help your business, please get in touch.