Module 1

Day 1

Introduction

The most common structures of loan transactions

• Single banks and syndicated loan
• Term loans and revolving credit facilities
• Single currency and multi-currency facilities
• Loan and guarantee facilities
• Secured and unsecured facilities

Pre Contractual Issues

• What issues should it address
• How much detail should it contain
• Is it intended to create a legally binding commitment

LIBOR funding and broken funding costs

This session will involve consideration of how the Eurocurrency interbank markets work and the consequences in the documentation in terms of

• Interest rates and interest periods
• Broken funding costs (and profits)
• Default interest
  
  

Withholding tax

Here we will look at withholding tax, double taxation treaties, and the consequences for the loan documentation

OVERVIEW AND ADMINISTRATIVE PROVISIONS

This session will involve an overview of the Loan Agreement and how it is structured to protect the Lender, and an examination of some of the “mechanical” provisions of a typical loan agreement, such as the payments clause and the procedures to be followed on drawdown

• Drawdown procedures
• Repayment and prepayment
  
  

REPRESENTATIONS

Delegates will consider the purpose of the representations. Typical representations will be considered, including common comments from either side.

Homework briefing

As homework, participants will review a specimen loan agreement t identify conflicts between different provisions

Day 2

Repeated representations

We will review the homework; the impact of repeating representations; and the interrelations between different parts of the document, both in a term loan and in a revolving credit

COVENANTS AND EVENT

Typical covenants and events of default will be discussed, including

• Purpose
• Financial covenants
• Cross default
• Material Adverse Change
• “Default”
  
  

COVENANTS AND EVENTS OF DEFAULT (contd.)

GLOSSARY OF TERMS

BOILERPLATE PROVISIONS AND LOAN TRANSFERS

• Set-off clause
• Indemnities
• Agency clause
• Pro rata sharing clause
• Loan transfers

- Novations

- Assignments

- Sub participations

- Derivatives

Homework Exercise - Calculate the likely recoveries of different classes of creditors in a winding up

Day 3

SECURITY

Review Homework

SECURITY AND QUASI SECURITY

Different types of security will be considered, including

• liens
• pledges
• charges (fixed and floating);
• mortgages
• title as an alternative
• security on contracts
  
  

SECURITY AND QUASI SECURITY (contd.)
GUARANTEES

• Commercial benefit and transactions at an undervalue
• Common provisions of a guarantee
  
  

DUE DILIGENCE AND WHERE TO DO IT

• What issues are relevant?
• Where to conduct due diligence
• Legal opinions

Module 2

Day 4

Registration and Welcome Coffee

• Review of Key Loan Agreement Issues
• “Relevant Companies”
• Conflict between representations, conditions precedent, undertakings and events of default
• The pari passu clause
• The negative pledge
• The cross default clause
• The material adverse change clause
• Linking the loan to the borrower`s rating
• “material”, “reasonable” worth the debate?
• Grace periods
• Prepayment events
• Subjectivity and control in the context of events of default

Day 5

Workshop

• Participants will consider a number of borrower’s comments on the Loan Agreement
• This exercise will highlight key topics within Representations, Undertakings, Events of Default, and Boilerplate, including
• Repeated Representations
• Negative Pledge
• No Disposals
• Cross Default
• Material Adverse Change
• Transferability
  
  

Key Legal Issues

• Governing law and jurisdiction
• What courts have jurisdiction to deal with disputes in an international context? What law will they apply?
  
  

Clawback/unenforceability

• In what circumstances might obligations be avoided or become unenforceable?
• Financial assistance
• Ultra vires
• Commercial benefit
• Preferences
• Transactions at an undervalue
• Registration
• Penalties
• Administration
  
  

Interference with contracts

Intercreditor arrangements
We will review a number of different intercreditor agreements relevant to different circumstances

End of Course

 

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