Loan Documentation e-Learning

Stage 1

General Introduction and Administrative Provisions

Part 1 - Introduction

• Lesson 1: A Company's Overview
  - Debt vs. equity
  - Capital markets vs. loan markets
  - Loan agreement structure
   
• Lesson 2: Structural Subordination
  - What is it?
  - What impact does it have on loan undertakings?
  - Use of upstream guarantees
  - Locations for due diligence

Part 2 - Administrative Provisions of the Loan Agreement

• Lesson 1: General Definitions
  - Including circularity
  - Moving definitions
  - Uncapitalised definitions
  - Avoiding the traps
   
• Lesson 2: Specific Definitions
  - Including finance documents
  - Material adverse effect
  - Reference banks
   
• Lesson 3: Financial Indebtedness
  - The definition explained including title financing such as finance leasing and repos
   
• Lesson 4: Drawdown and Repayment
  - Lenders’ rights and obligations
  - Conditions precedent
  - Multicurrency mechanics and prepayment

Stage 1 Quiz

Stage 2

Interest, Representations and Repeating Representations

Part 1 - Interest

• Lesson 1: Interest Rates and Funding Costs
  - Base rate
  - Central bank rates
  - Basel III liquidity ratios
  - Funding costs
   
• Lesson 2: LIBOR
  - Screen rate
  - Base rate
  - Reference banks
   
• Lesson 3: Interest Periods
  - Broken funding costs
  - Default interest and penalties 
  - Interest periods in revolving credits
   
• Lesson 4: Additional Costs (Part 1)
  - The market disruption clause
   
• Lesson 5: Additional Costs (Part 2)
  - The Increased Costs clause
   
• Lesson 6: Withholding Tax (Part 1)
  - Withholding tax
  - Grossing up
  - Double tax treaties
  - Gross up and loan transfer
  - FATCA
   
• Lesson 7: Witholding Tax (Part 2)
  - Risk allocation
  - The clawback clause
  - Loan transfers

Part 2 - Representation and Repeating Representations

• Lesson 1: Representations
  - Obligors and Group members
  - Role of representations in risk allocation
  - Litigation
  - Pari passu
  - Litigation and breach of contract representations
   
• Lesson 2: Repeating Representations
  - Hazards
  - Discussion of which representations to repeat

Stage 2 Quiz

Stage 3

Undertakings and Introduction to Events of Default

Part 1 - Undertakings

• Lesson 1: Information Undertakings
  - GAAP and IFRS
  - Frozen and moving GAAP provisions
  - Auditors’ certificates and other information undertakings, including the obligation to notify of a Default
   
• Lesson 2: General Undertakings 
  - The negative pledge
  - The no disposals clause
   
• Lesson 3: Financial Covenants (Part 1)
  - Relationship with the material adverse change and cross default clauses
  - Review of interest cover, leverage and cash flow ratios
   
• Lesson 4: Financial Covenants (Part 2)
  - Gearing
  - Liquidity
  - Tangible Net Worth
  - Capital expenditure
   
• Lesson 5: Scope of the Agreement 
  - Group members, Obligors and Excluded Companies
  - Change of ownership or control of the company

 
Part 2 - Introduction to Events of Default

• Lesson 1: Events of Default - The Big Picture
  - Objective vs. subjective Events of Default
  - Scope of the agreement
  - Robustness, particularly in view of the cross default clauses
  - Events of Default outside the Borrower’s control
   
• Lesson 2: Event of Default - Purpose and Mechanics (Part 1)
  - The role of the Events of Default in: 
        -  Allocating risk
        - Giving the Lenders leverage
  - Automatic and non automatic Events of Default
  - Borrower’s right to remedy an Event of Default which has occurred
  - Events of Default and default interest
   
• Lesson 3: Events of Default – Purpose and Mechanics (Part 2)
  - Defaults and Events of Default
  - 'Rollover Loans' in a revolving credit facility
  - Effect of disputed Event of Default on acceleration

Stage 3 Quiz & Compulsory Report

Stage 4

Events of Default and Boilerplate

Part 1 - Events of Default

• Lesson 1: 'Breach of Contact' Events of Default
  - Non payment
  - Failure to meet financial ratios
  - Breach of undertaking and misrepresentation
   
• Lesson 2: Other General Events of Default 
  - Insolvency
  - Litigation
  - Change of control
  - Illegality
   
• Lesson 3: Cross Default Purpose
  - Spiralling effect
  - Cross default vs. cross acceleration
  - Ways in which the borrower may seek to reduce the impact of the clause
   
• Lesson 4: Material Adverse Change
  - Arguments for and against
   
• Lesson 5: Material Adverse Change
  - Wording

Part 2 - Boilerplate

• Lesson 1: The Agent’s Role and the 'Boilerplate'
  - Fiduciary duties
  - Exclusion clauses
  - Other 'boilerplate' clauses, including: 
       - The pro rata sharing clause
       - The anti estoppel clause
       - The jurisdiction clause
       - The clause dealing with waivers and amendments
   
• Lesson 2: Transfer Methods 
  - Assignments
  - Novations
  - Subparticipations (funded and risk)
  - Credit derivatives
   
• Lesson 3: Transferring Secured Loans 
  - The options for structuring secured syndicated loans
   
• Lesson 4: The Transfer Clause Borrower 
  - Concerns
  - 'Yank the bank'
  - Confidentiality

Part 3 - General

• Defaulting Lenders
  - Addressing issues which arose during the financial crisis of 2008

 
Course End

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