2 Loan Facilities
Rafal Zakrzewski, Geoffrey Fuller
Edited By: Rafal Zakrzewski, Geoffrey Fuller
- Syndicated loans — Default and credit — Interest and credit — Lending and credit — Repayment of credit
This chapter examines the structure and content of loan facility agreements. It begins with a discussion of the nature and legal effect of term sheets. It then moves to its central concern which is the examination of the core features of both bilateral and syndicated loan facilities. It guides the reader through the overall structure and contents of such facilities. The financial provisions dealing with benchmark rates are then explained in detail. There follows a discussion of legal issues associated with conditions precedent and a consideration of the legal risks resulting from a wrongful refusal to lend. The chapter then considers issues surrounding payments by the borrower of principal and interest, and the doctrine of penalties. Next provisions which protect the lenders’ rate of return are explained, including increased costs, gross up and indemnity clauses. After the credit monitoring provisions are considered, the most negotiated parts of facility agreements are examined in detail: representations and warranties; covenants and undertakings and events of default and acceleration.