Q. What is equity investment?
Money that is invested in a venture or an asset that ranks behind debt in priority. The proceeds of liquidation will be distributed to non-equity creditors first, which means that the equity investors will recover their investment only if there is a surplus at liquidation. Equity investors therefore share in the risk and reward of the company and its business. If a transaction is successful, debts have been repaid, equity investors will get all of the "upside".
Q. What is a term sheet?
A term sheet is a document which sets out the key terms of a commercial transaction agreed between parties in the course of initial negotiations. Save for provisions relating to confidentiality and costs, it is not usually legally binding on the parties. It is normally entered into at the beginning of a transaction before the detailed negotiations and drafting of the contracts to ensure that all parties have the same understanding of the key commercial terms.
Q. What is the IBG Away Day?
Norton Rose LLP has Industry Business Groups (IBGs) which focus on specific industries (e.g. shipping) and encourage the sharing of industry knowledge and sector-specific expertise across the practice. IBG Away Days bring together people from across our network and they enable colleagues from the same areas of law to meet, get to know each other and discuss issues in their field.
Q. What is security?
Lenders take security over their borrower's assets in order to protect them against the risk of the company becoming insolvent. A secured lender will usually have the right to sell the secured asset (e.g. the ship) and will be able to receive the proceeds of sale in priority to unsecured creditors. This is key where there are insufficient assets in the company to cover all of its debts. The main forms of security in a shipping transaction are mortgages and assignments of contracts.
Q. What are CPs?
Conditions Precedent (CPs) are conditions in a contract which provide that the whole agreement or a certain part of it will only come into force if and when certain conditions are met. Loan Agreements, for example, will have a list of CPs to be satisfied by the borrower before the lender becomes obliged to advance its loan. It is often a trainee's task to collect CPs and to ensure that they are in form and substance satisfactory to our clients.