Amend and extend
M&A / Merger ModelA negotiated push out of a loan's maturity, paid for with a fee and a wider margin, used when a full refinancing is not available.
Also written: amend-and-extend, A and E, maturity extension
An amend and extend deals with a maturity that is coming due when the market will not refinance it. Lenders who consent agree to move their maturity date out, usually by two or three years, and are paid for the extra time with an upfront fee and a wider margin. Nothing new is raised and nothing is written off.
It is a lender by lender decision rather than a class vote, which is the part most often missed. Lenders who decline keep their original terms and are repaid on the original date, so a facility frequently ends up carrying two maturities and two prices inside a single credit agreement.
That is also why it rarely solves the problem on its own. If a fifth of the facility declines, a fifth of the maturity wall is still standing, and the borrower has paid a fee and a higher margin for the privilege of moving the rest.
What it signals matters as much as what it does. A borrower able to refinance cleanly would have refinanced, so an amend and extend is normally read as evidence that the credit has weakened, that the market has closed, or both.
Worked example
A borrower has €500m of term loan maturing in twelve months and cannot place a new facility. Lenders holding €400m agree to extend by three years for a fee and a wider margin. Illustrative figures.
The remaining €100m keeps the original date. The maturity wall has been reduced rather than removed, and the cost of the whole facility has gone up.