AUSTRIA Law and Practice

Contributed by: Markus Fellner, Florian Kranebitter and Mario Burger, Fellner Wratzfeld & Partners

Fellner Wratzfeld & Partners

1010 Wien

Schottenring 12

Vienna

Austria

Tel: +43 1 53770 0

Email: office@fwp.at

Web: www.fwp.at

1. Market

1.1 Major Lender-Side Players

In Austria, acquisition financing is mainly provided and arranged by international and national credit institutions, with Austrian banks often providing financing for small and medium-sized enterprises (SMEs). LBO structures, which regularly consist of different financing stages and tranches, are to be distinguished from classic acquisition financing. In the case of an LBO, it is common to have different financing layers. Replacing parts of the bank financing after closing with high-yield bonds has become a common feature in the case of larger LBOs.

If the target is a large Austrian company, the acquisition financing or LBO structure is usually provided by international financing syndicates consisting of renowned international credit institutions.

Commercial lending requires a banking licence in Austria.

In order to provide loan financing on a commercial level to companies in Austria, there are three possible options.

• Application for a banking licence – obtaining a banking licence is a rather complicated procedure and requires in-depth preparation over a longer period of time. One of the legal requirements that has to be satisfied and is especially extensive is the preparation of an appropriate business plan, which is reviewed by the supervisory authority.

• It is legally possible for a credit institute of another EU member state to establish a branch (the existing banking licence would need to be notified to the Austrian regulator).

• The most common approach for non-Austrian banks wishing to engage in the lending business and avoid establishing a permanent presence is utilising the EU freedom of services in another EU member state.

For non-banks it is possible to participate in the lending business only if this activity is exempted from the requirements of holding a banking licence (eg, acquisition of loan portfolios by special securitisation purpose entities or through the use of bonds and initial loans by credit institutions, which are transferred to new lenders outside of Austria after the first loan has been granted). However, the strict regulatory requirements always require a case-by-case assessment.