Debt pushdown
What is a debt pushdown after an acquisition, and why do lenders want one?
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BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED
// THE SHORT ANSWER
A debt pushdown moves acquisition debt from the buyer's holding company to the company it bought, so the loan sits where the earnings and assets are. Usually the target guarantees and secures the acquisition loan or borrows to repay it, so its directors must see corporate benefit and meet each market's financial assistance rules: a procedure in New Zealand, a no-material-prejudice test or shareholder approval in Australia, and in the UK a prohibition only where a public company is involved. New Zealand companies can also amalgamate. Lenders want it to end the structural subordination of a holding-company loan; buyers may want the interest set against the target's profits.
BASIS Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.
// THE FULL PAGE
Debt Pushdown: Moving Acquisition Debt to the Target →
The loan bought the business. Now it has to live there.
// WHAT IT IS NOT
Financial assistance is the legal rule a pushdown must clear, and an upstream guarantee is one route to it; the pushdown is the aim of putting the acquisition debt where the cash is.
// WORKED IN
// NEXT TO IT
- Personal guarantee release
- General security agreement (GSA)
- Subordination
- Intercreditor agreement
- Loan to value ratio (LVR)
- Forced-sale value
- PPSR (Personal Property Securities Register)
- Retention of title
- Purchase money security interest (PMSI)
- Preferential creditors
- Letter of comfort
- Cross-guarantee
- Floating charge
- Structural subordination
- Recovery waterfall
- First mortgage
- Pari passu
- Loan to security ratio (LSR)
- Lending value
- All-monies clause
- Valuation reliance letter
- Solicitor's undertaking
- Loss payee (bank's interest noted)
- Liquidation value (orderly and forced)
- Water entitlements (as security)
- Livestock as security
- Specific security agreement (SSA)
- Debenture (security document)
- Share pledge (share charge)
- Step-in rights
- Third-party mortgage
- Limited guarantee
- Upstream guarantee
- Corporate benefit
- Financial assistance (whitewash)
- Deed of priority
- Perfection (security interest)
- Title insurance
- Payout figure (redemption statement)
- Independent legal advice certificate
- Panel valuer
- Desktop valuation
- Partial release (of security)
- Security trustee (security agent)
- Cash cover (cash-collateralised facility)
- Back-to-back loan
- Tax arrears (statutory tax debt)
- Statement of position (personal assets and liabilities)
- Second lien (second-lien loan)
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