Regulations on Financing of Buyouts to have "No Exceptions"

The Office of the Comptroller of the Currency announced an update of a policy launched one year ago intended to reduce high-risk loans for corporate acquisitions. Quoted in the Wall Street Journal, Martin Pfinsgraff, the OCC's senior deputy comptroller for large-bank supervision, said, "On new issuance, we have a 'no exceptions' policy." The guidance, originally published in March 2013, said that banks should not finance deals that would result in the post-transaction company having a debt-to-EBITDA ratio greater than 6:1. This policy could affect ESOP transactions, although the appropriate way to consider seller financing and other ESOP issues is not clear.