‘Net short’ defence language could prove useless in bonds

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By Owen Sanderson
09 Jul 2019

Language to prevent ‘net short’ debt activist investors manipulating distressed corporates to benefit CDS positions could prove ineffective in bond documentation, shutting down the changes almost as soon as they have been introduced in the market.

Two deals so far seem to have the anti-short seller language — financing for Clayton, Dubilier & Rice’s buyout of US tech firm Sirius Computer Solutions, and for Blackstone, CPPIB and Kirkbi’s buyout of UK amusement park operator Merlin Entertainments.

In both cases, Chicago-based law firm Kirkland ...

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