How to create and manage a deal in the Debt Syndication app of the Kls Desk?

Introduction

As an Arranger, Debt Syndication enables you to streamline the organization of a syndication by inviting your partners to participate, sharing documentation with them, and collecting their responses in real time—making it easier to build your pool. Throughout the syndication process, an internal messaging system is available to communicate effectively with your partners. Once the syndication is complete, you can send the deal information to the Middle Office with a single click. By managing your deals in the tool, all elements are tracked and centralized for you and your stakeholders.

Debt Syndication covers different use cases:

• Gathering indications of interest (expression of interest)
• Facilitating firm responses
• Selling debt on the secondary market to manage your risk
• Acting as lead banker by syndicating discreetly

1. Key Steps

The syndication process takes place in four steps, all managed by the Arranger:

1. Draft: This is the first step when you create an operation. It is divided into two parts:
   
   1. Creating the financing deal allows you to provide context to your stakeholders by entering information such as the operation name, financing amount, uploading documentation and the term sheet, etc.
   2. Preparing to send invitations lets you choose which banks you wish to invite and for which amounts. Once you’ve made your selections, you can send your invitations and go to the next step: firm response.
2. Firm response : At this stage, your partners have received your invitation to access the deal and to submit their responses based on the offer received. They will review all the information you provided in the previous step and can indicate a committee agreement or any other decision. As the Arranger, you can monitor the entries made by your partners. Once the total amount of offers received is sufficient, you can proceed to the next step: final allocations.
3. Final allocations: This step is the last one before finalizing the deal. Here, you can adjust your partners’ allocations, either increasing or decreasing them. Once your pool is finalized, you can close the syndication.
4. Syndication completed: This is the final step, which freezes your deal and keeps it recorded for five years, for you and your partner contacts who have access to it.

2. Draft

To create a new deal, go to the Debt Syndication app of the Kls Desk, then access the Arranger interface using the side navigation bar.

On the operations tracking page, you have the ability to:

• Get an overview of your portfolio. This page centralizes all the deals you have access to (whether you are the creator or another user has given you access) and organizes them by syndication stage.
• Create a new deal using the “Create a new operation” button available at the top right of your screen.

To create a new deal, enter the following information:

• The name of the risk group
• The folder name
• The total amount of funding
• The type of market

Once you have entered this information, you can confirm. The deal will then be created.

 

a. Create a syndicated operation

To provide context to the banks you will invite, you must enter certain required information, as well as optional details.

The following fields are mandatory:

• The type of operation
• The process: Expression of Interest followed by Firm Response, or Firm Response directly. Using an expression of interest allows you to consult the selected banks in a first round, with an indicative range. They can then submit an initial response, followed by a second response at the firm response stage to indicate a committee agreement or refusal. At any time, you can switch on to the firm response stage, even if you haven’t received responses from all your partners.

• The operation summary, to provide context to your partners
• The financing tranches, which quickly give an overview of the deal structure. All fields must be completed except the comment section, which is optional.
• The arranger information, visible only to you and other users from your entity who have access to the deal
• The preferred contact for participants, allowing you to specify who should be contacted first in case of need
• The indicative calendar of the operation, which allows you to give timing information to participants. This is only for reference and does not affect the progress of the deal.

The following items are optional:

• Documents shared with participants: this secure dataroom is organized in 4 columns and allows you to share documentation with your participants throughout the syndication process. Documents are tracked and can be downloaded at any time.
• The termsheet section: allows you to upload the operation termsheet in PDF format, accessible to your participants.
• Actors of the operation: allows you to specify any other bank(s) syndicating the deal alongside you, to keep participants informed.
• NDA: if you upload a confidentiality letter to your deal, each user from participating entities you add will be required to download and sign the NDA you have provided. Signature is required to access your file. As the Arranger, you can see who has signed the NDA and who has not, and thus does not yet have access to your deal.
  You can:
  • Choose a personalized NDA, uploaded from your server
  • Choose a generic NDA provided by Kls
  • Choose not to include a NDA

Once you have filled in these details, click “Save and go to the next step” at the bottom right of your screen. You will then move to the second preparation step: sending invitations to participants.

At any time, you can:

• Return to the deal creation page (A), for example to modify the tranches or the dataroom.
• Edit the deal members (B), to grant read or edit access to a user. Edit access gives the user the same rights as the deal creator.

b. Prepare to send to participants

Invite other banks to participate in your deal by clicking on “Invite participant,” then use the search bar to select the desired bank.

Next, choose the invitate amount, the participation fee, and the tranches you are inviting the participant to join. Then, enter the email address of the contacts who will have access to the file—the suggested contacts are already authorized. If your contact does not yet exist, simply enter their email address and confirm.

Once you have invited all the desired banks, click on “Switch to firm response”: by moving to the next step, the selected contacts will receive an email inviting them to access the deal.

3. Firm Response

Your deal is now accessible to the invited partners. You will be notified automatically by email as soon as a participant submits their response. See the section on notifications.

At the top right of your screen, the total amount of offers received and the number of committee approvals and refusals are updated in real time.

At any time, you can:

• Invite additional banks if needed.
• Archive a bank using the box icon at the end of the corresponding row.
• Re-invite a participant who has either declined the offer or was previously archived. To do this, click the box icon at the end of the corresponding row.

By clicking on the name of one of the invited banks, you can also:

• Communicate with the participant: You can contact a participant at any time by sending them a message via the integrated messaging system in the deal file. Your message will be tracked, and the contacts from the entity will receive a notification by email. They can reply using the same channel. You can also attach files.
• Respond on behalf of the participant, by indicating a committee approval with the participation amount and breakdown across each tranche. You can also indicate a committee refusal. The response will be recorded with the note “Responded by the Arranger.”
• Add a specific NDA for this participant. This will replace the general NDA from the financing file for this specific participant. You can set a specific NDA for each participant.
• Add or remove contacts who have access to the file.
• View the history of offers.

Once you have reached the desired syndication amount, you can move to the next step: Final Allocations. This step allows you to adjust the final participants’ allocations (up or down) and confirm your syndication pool before closing the deal.

4. Final allocations

At this stage, you can adjust the allocations for each participant (including your own entity) on each tranche. Once the final allocations are set, click on “Validate allocations and compose my union”. Your deal will then move to the “Syndication completed” stage.

5. Syndication completed 

At this stage, your deal is locked and remains accessible to you and your stakeholders for 5 years after the closing date.

You can continue to add documents to the dataroom and use the messaging feature as needed.

6. Move the deal into Debt Tracking app

Debt Tracking is the tool that allows you to monitor your financing lines and associated contractual commitments collaboratively with your entity’s teams, partners, and clients. See the article: Debt Tracking features.

Once your deal is completed in Debt Syndication, you or the Agent in charge of monitoring the case can transfer the deal to Debt Tracking. This allows you to prepare for closing by giving your stakeholders access and sharing KYC and CPs via the dataroom.

To do this, go to Debt Tracking > Operations > Create a new operation (top right of your screen). Then check: “Use a Debt Syndication operation”.

After clicking “Create operation", tou will retrieve the main details of the file (deal name, total amount, lenders and allocations, etc.).

7. Notifications

Members of your entity who have access to the file receive an immediate automatic email when:

• A participant responds to your offer to participate

Members of your entity with access to the file receive a summary email (the following morning) when:

• A participant has sent you a message via the internal messaging system

Participants receive an immediate automatic email when:

• The Arranger sends invitations/requests, allowing added contacts to access the file
• The Arranger adds a document to the dataroom
• The syndication is completed

Participants receive a summary email (the following morning) when:

• The Arranger sends a message via the internal messaging system