{"id":658,"date":"2021-06-12T22:37:22","date_gmt":"2021-06-12T22:37:22","guid":{"rendered":"http:\/\/legalblog.ie\/?p=658"},"modified":"2021-06-13T09:40:05","modified_gmt":"2021-06-13T09:40:05","slug":"loan-market-documents","status":"publish","type":"post","link":"https:\/\/legalblog.ie\/loan-market-documents\/","title":{"rendered":"Loan Market Documents"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_63 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/legalblog.ie\/loan-market-documents\/#Loan_Market_Association\" title=\"Loan Market Association\">Loan Market Association<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/legalblog.ie\/loan-market-documents\/#Term_Sheet_Commitment_Letter\" title=\"Term Sheet \/ Commitment Letter\">Term Sheet \/ Commitment Letter<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/legalblog.ie\/loan-market-documents\/#Syndicated_Loans\" title=\"Syndicated Loans\">Syndicated Loans<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/legalblog.ie\/loan-market-documents\/#Some_Types\" title=\"Some Types\">Some Types<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/legalblog.ie\/loan-market-documents\/#Deal_Specific_Terms\" title=\"Deal Specific Terms\">Deal Specific Terms<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/legalblog.ie\/loan-market-documents\/#Security_and_Priorities\" title=\"Security and Priorities\">Security and Priorities<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/legalblog.ie\/loan-market-documents\/#Boilerplate\" title=\"Boilerplate\">Boilerplate<\/a><\/li><\/ul><\/nav><\/div>\n<h3><span class=\"ez-toc-section\" id=\"Loan_Market_Association\"><\/span>Loan Market Association<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The Loan Market Association is a European body of banks and lenders.\u00a0 It has developed the primary and secondary loan market in Europe through the provision of standard documentation for primary and secondary syndicated loan markets, the establishment of standard market practice, issue of guidance, education, training and lobbying.<\/p>\n<p>It operates through a number of committees including its documentation committee which is comprised of lawyers and other participants who develop new market documents and revise existing documentation in the light of changes in law, tax and practice.<\/p>\n<p>Loan market association documents are commonly used in respect of syndicated lending.\u00a0 Investment-grade loans are loans to high rated borrowers which are capable of sale in the secondary market.\u00a0 Leveraged loans are loans to other borrowers who are perceived to carry higher risk.<\/p>\n<p>The LMA has published an investment-grade agreement, a leveraged facility agreement and a template for high-value syndicated lending.\u00a0 The documents are revised and reissued from time to time.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Term_Sheet_Commitment_Letter\"><\/span>Term Sheet \/ Commitment Letter<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The mandate letter or commitment letter is issued by the arranger bank.\u00a0 It agrees to use best efforts to raise the syndicated loan on terms set out.\u00a0 On acceptance, the arranger bank will seek to arrange the relevant loan.<\/p>\n<p>The term sheet is a non-binding statement of the commercial terms and conditions of the loan.\u00a0 The facility agreement is based on it.\u00a0 The facility agreement is the loan agreement.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Syndicated_Loans\"><\/span>Syndicated Loans<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Syndicated loans are loans, typically high-value loans issued by a number of banks collectively.\u00a0 The LMA has published a variety of documents for use in syndicated lending.<\/p>\n<p>The agreement will contain provisions for the relationship between the agents, the lenders and the arranger, payments, administration and the mechanics of dealing with issues arising under the loan agreement.<\/p>\n<p>There may be provision for replacement of obligors and by way of accession of a new borrower or guarantor and\/or release of existing group entities.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Some_Types\"><\/span>Some Types<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The leveraged facility agreement is designed primarily for a transaction involving acquisition finance, where there are also mezzanine or lower levels of debt and equity.\u00a0 Commonly, the parent company establishes a subsidiary to acquire a target company.\u00a0 The lender is granted senior security with priority over all other debt.<\/p>\n<p>The leveraged facility agreement has most of the features of a loan agreement.\u00a0 It will provide for conditions precedent.\u00a0 It may provide for ancillary facilities.<\/p>\n<p>A revolving loan may require to be reduced to a certain limit during a period of the year in accordance with the working capital cycle so that it does not become long-term debt. There may be ancillary facilities within the revolving loan facility dealing with specific requirements relative to the trade.<\/p>\n<p>In more sophisticated transactions, there may be multiple loans involving facilities with different currency options and repayment terms.\u00a0 A revolving loan provides for a maximum amount, typically, to deal with working capital requirements, which may be drawn down and repaid.\u00a0 It may allow the issue of trade credit.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Deal_Specific_Terms\"><\/span>Deal Specific Terms<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The terms of a loan facility will be specific to the transaction.\u00a0 There will generally be a term loan or a revolving facility<\/p>\n<p>The Schedules will set out the respective details of the lenders and their commitments.<\/p>\n<p>The schedules will set out the conditions precedent.\u00a0 They may include standard conditions precedent on corporate existence. There may be o due diligence reports on the target company reports, legal opinions, etc.<\/p>\n<p>The interest rate provisions will be set out including the basic measure, the margin interest period and calculations.<\/p>\n<p>There will be provision for repayment and there may be special provision for mandatory repayment in certain cases.<\/p>\n<p>There may be provision for guarantors and security.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Security_and_Priorities\"><\/span>Security and Priorities<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The transaction security documents are those creating security over assets of the borrower or third parties such as guarantors in respect of the obligations under the finance documents.\u00a0 The finance documents are typically the loan agreement including related documents such as hedging documents in respect of interest or currency inter-creditor agreement.<\/p>\n<p>The security is granted in favour of a security trustee.\u00a0 Security may be granted for the benefit of the senior lenders and also the mezzanine lenders in accordance with the terms of priority.\u00a0 This is defined in a priorities or inter-creditor agreement.<\/p>\n<p>The inter-creditor agreement deals with relations between the senior creditor and junior lenders (such as a group company) who may be already in place.\u00a0 It defines their respective rights in respect of repayment and enforcement.<\/p>\n<p>Mezzanine finance ranks below senior debt and ahead of equity and ordinary creditors.\u00a0 It will build in a greater rate of return to reflect the greater risk. \u00a0There may be a provision for the holders of mezzanine loans to have the right to acquire shares.<\/p>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Boilerplate\"><\/span>Boilerplate<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>There will be provisions for representations, warranties and covenants.<\/p>\n<p>The agreement will set out the events of default and the consequences.<\/p>\n<p>There will be provisions dealing with assignment and transfers by the lenders.<\/p>\n<!--themify_builder_content-->\n<div id=\"themify_builder_content-658\" data-postid=\"658\" class=\"themify_builder_content themify_builder_content-658 themify_builder tf_clear\">\n    <\/div>\n<!--\/themify_builder_content-->\n","protected":false},"excerpt":{"rendered":"<p>Loan Market Association The Loan Market Association is a European body of banks and lenders.\u00a0 It has developed the primary and secondary loan market in Europe through the provision of standard documentation for primary and secondary syndicated loan markets, the establishment of standard market practice, issue of guidance, education, training and lobbying. It operates through [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[53],"tags":[],"_links":{"self":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/658"}],"collection":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/comments?post=658"}],"version-history":[{"count":4,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/658\/revisions"}],"predecessor-version":[{"id":681,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/658\/revisions\/681"}],"wp:attachment":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/media?parent=658"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/categories?post=658"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/tags?post=658"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}