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Control Freaks; Buyers get creative with semantics to avoid tripping change-of-control provisions.

Publication: Mergers & Acquisitions: The Dealmaker's Journal
Publication Date: 01-OCT-09
Format: Online
Delivery: Immediate Online Access

Article Excerpt
Byline: Ken MacFadyen

Exelon's bid to acquire NRG Energy may have missed the mark, but M&A pros have been studying the transaction-at least one of its iterations-as a possible way to avert change-of-control provisions.

According to David Grinberg, who chairs the M&A group at law firm Manatt, Phelps & Phillips, the "inverse acquisition" construct could be one solution for buyers who aren't keen on the idea of refinancing a target's debt.

"With leverage so difficult to obtain, the prospect of triggering the change-of-control provisions [in seller's debt agreements] is causing problems for buyers," Grinberg...

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