|
Loan Facility Documentation
- Course Outline
Aims
To provide those attending with a good working understanding of the principal
clauses and terms of a range of common loan facilities
To expose participants to the workings of loan agreements and to examine the
calculation and payment of interest and fees
Programme
Pre-course
Background reading
Day 1
Session one
The business of banking – extension of credit
Why a borrower seeks funding. How a loan is negotiated. What protection does
the lender seek? What flexibility does the borrower require? Interest rate
structures, and how a lender funds a loan. Security, collateral and guarantees
Exercise: drawing up Heads of Agreement
Session two
- Intermediation
- Types of advance – uncommitted money market advance facilities, committed,
short, medium and long term intermediated facilities.
- Term loans, revolving and multi-currency facilities.
- Acceptances and trade finance
Session three
- Loan Documentation
- Parties to a transaction
- Key clauses
- Conditions precedent
- Availability
- Drawdown
- Fees
- Margin
- Currency
- Interest rate fixing
- Mandatory liquid assets
- Grossing-up provisions
- Representations & warranties
- Cross-default
- Financial covenants and reporting obligations of the borrower
- Covenants
- Negative pledge
- Events of default
- Loan transfers
- Security
- Recourse
- Loan defaults, provisions, work-outs and recoveries
Exercise: drawing up a simple loan facility letter
Session four
- Disintermediation
- Commercial paper and Floating Rate Notes.
- Backstop and standby support facilities
Session five
- Types of lending
- Bilateral, club and syndicated. Multiple Option Facilities. Primary and
secondary loan markets. Loan transfers, sales and assignments
- Interim preparation
- Specimen facilities
Exercise: compile a bible of specimen facilities with key clauses highlighted
Day Two
Session one
- Loan operations
- Conditions precedent to drawdown. Examples of specific material
Session two
- Initial drawdown, and subsequent advances, rate fixing, interest payment and
apportionment. Interest calculation bases
- Calculation of the currency equivalent and available amount. Tranche
reductions. Review different calculation methodologies
Session three
- Front-end, signing, negotiation, commitment fees, non-utilisation and other
fees
- Calculation, collection and apportionment
Session four
- Secondary Loan Market
- Loan Market Association specimen documentation.
- Loan sales and transfers, assignments, novation
Session five
- Practical exercises
- Familiarisation with loan documentation
|
