Syndicated facility meaning

Withholding tax is a key concern relating to loans. The objective is to ensure no withholding tax arises on interest, thereby avoiding the administrative burden and cost linked to withholding tax. For further detail in this area, see Practice Note: Tax considerations on a loan agreement—the tax gross up clause—a borrower problem. Loan documentation is typically prepared on terms favourable to lenders. That tendency is especially marked for syndicated loan facilities. Such contracts are generally structured for straightforward transfer between lenders and commonly follow, or are derived from, one of the model loan facility agreements of the Loan Market Association (LMA). For an explanation of the rationale for gross-up clauses in loan agreements, see Practice Note: Tax considerations on a loan agreement—the tax gross up clause—Why have a tax gross-up?...

At completion At completion, funds are transferred between the parties and the deal is treated as completed. For a straightforward corporate facility, this typically involves a movement of monies from the lender to the borrower. In other financing structures, such as acquisition or asset finance, monies will ordinarily pass from the lender(s) to the borrower or to an existing lender (where its loan is being refinanced) and then from the borrower, acting as purchaser, to the seller of the business or asset. Following completion, the lender’s solicitors must address several legal and practical tasks. This checklist sets out the principal items for the lender’s lawyers to handle post-completion, including: perfecting security addressing any conditions subsequent complying with solicitors’ undertakings managing the original documents and compiling transaction bundles, and billing the client These matters are pertinent to most transactions and apply equally to bilateral and syndicated facilities. For further detail, see Practice Note: Post-completion phase in loan transactions...

Points to consider What is the most appropriate method of transfer? Consider: Think about whether you are transferring rights alone (eg drawn commitments) or also obligations (eg undrawn commitments). An assignment passes only rights, whereas a novation passes both rights and obligations. Novation is usually favoured for loan transfers because it conveys rights and duties together. If assignment is adopted, the obligations can be moved by novation. For more detail, see Practice Note: Transferring a loan by assignment. Whether consent can be obtained from the borrower? By law, an assignment does not require the counterparty’s consent. However, the facility agreement will often require borrower consent for an assignment, and for a novation as well. Sub-participation is sometimes used to transfer loans on syndicated transactions where borrower consent cannot be obtained. That said, some deals may still require borrower consent for sub-participation. Whether the intention is for the transfer to be kept confidential from...

This Practice Note looks at Term Loan B (TLB) facilities, which often feature as a senior tranche within syndicated loans in leveraged financings. TLBs are long-established in the US market and are increasingly seen in the European lending market for institutional investors. It examines the structure of a typical TLB and how it diverges from traditional European leveraged loans, before setting out the key features. This Practice Note assumes some understanding of leveraged finance. For introductory information, see: Introductory guide to acquisition finance. For explanations of common terms, see Practice Note: Glossary of acquisition finance terms and jargon. What is a Term Loan B? In lending markets, ‘Term Loan B’ or ‘TLB’ (short for Term Loan Bullet) describes a tranche of senior secured credit facilities made available to a borrower and intended to be syndicated in the institutional loan market. They are usually floating-rate term facilities with an actual or implied non-investment grade rating, a five to seven year maturity and either nominal amortisation of 1% per annum...

This Practice Note outlines the principal issues to take into account when altering an existing facility agreement. It covers: typical drivers and rationales for changing a facility agreement key considerations when amending a facility agreement in the context of a bilateral or syndicated transaction matters to address where guarantees or security are in place ways to document an amendment, including whether to use an amendment letter, an amendment agreement, or an amendment and restatement agreement usual conditions precedent to effectiveness points concerning fees, costs and expenses This Practice Note does not address one-off waivers and consents. For further information on waivers and consents, see Practice Note: Waivers and consents. For material on amending security documents, see Practice Note: Amending security documents. For general contract law guidance on varying a contract, see Practice Note: Contract variation. Common reasons for amending a facility agreement After execution of the facility agreement and once funding has taken place, the borrower’s situation...

This How to guide sets the groundwork for drafting and negotiating a security document. It links to helpful precedents and highlights key drafting and negotiation points. Practice Note: Introductory guide to security in a lending transaction gives a fuller overview of taking and perfecting security, covering types of security, perfection and priority. Practice Note: Debenture drafting and negotiation guide provides detailed guidance on drafting and negotiating a debenture. Parties The parties to a security document in a bilateral transaction will be: the security provider(s)—eg the borrower(s) under the facility agreement or a third party, such as group company guarantors or a parent company, or both; and the lender The parties to a security document in a syndicated transaction will be: the security provider(s)—the borrower(s) under the facility agreement or a third party, such as the group company guarantors or a parent company, or both; and the security agent, acting as trustee and security agent for the lenders...

To be printed on the headed paper of the arranger [ s ] [ insert date ] To: [ insert full name and address of borrower ] Dear [ insert full name of borrower ] 1 We refer to the facilities agreement dated [ insert date of facilities agreement ] among [ insert full name of the borrower ] as the Borrower, [ the subsidiaries of the Borrower listed in [ insert Schedule containing borrowers' details ] as Original Borrowers ], [ the subsidiaries of the Borrower listed in [ insert Schedule containing guarantors' details ] as Original Guarantors ], the financial institutions set out in [ insert Schedule containing lenders’ details ] as Original Lenders, [ insert full name of arranger [ s ] ] as the Arranger, and [ insert full name of facility agent ] as the Agent, ...

[ To be printed on the headed paper of the agent/security agent ] [ insert date ] To: [ insert full name and address of [ parent ] ] Dear [ insert full name of parent ] 1 We refer to the facilities agreement dated [ insert date of facility agreement ] made between: [ insert full name of the parent ] in its capacity as the Parent; the Parent’s subsidiaries named in [ insert Schedule containing borrowers' details ] as the Original Borrowers; the Parent’s subsidiaries identified in [ insert Schedule containing guarantors' details ] as the Original Guarantors; the financial institutions set out in [ insert Schedule containing lenders details ] as the Original Lenders; [ insert full name of arranger [ s ] ] as the Arranger; [ insert full name of facility agent ] as the Agent; [ insert full name of security agent [ s ] ] as the Security Agent; ...

Term sheet for an unsecured syndicated facility for an investment grade borrower incorporated as a limited liability company in England and Wales with or without guarantees In respect of a £[ • ] term loan facility for [ insert name of borrower ] Date [ • ] 20[ • ] This term sheet is illustrative only, outlining the matters expected in the final documentation. It serves as a guide to content. It does not constitute an offer to make the facility available. Provision of the facility is conditional on satisfactory due diligence, credit committee approval [ , the mandate letter ] and satisfactory final documentation...