Loan Documentation

Course overview This three-day intensive course will cover all aspects of a loan transaction, concentrating particularly on the agreement itself and on the legal implications of a properly drafted and incorrectly drafted document. You will be taken step-by-step through the process of documenting a loan, from the early stages of pre-contractual issues, letters of commitment and written offers, through to administrative provisions, representations, covenants, defaults, transfer provisions, guarantees and the eventuality of insolvency. How this course will help you You will: Be guided through the essential elements of various loan transactions Learn how to negotiate representations, covenants and events of default from both a lender's and borrower's perspective Gain a thorough understanding of the real value of security Recognise pre-contractual issues and the legal nature of a letter of commitment Improve your knowledge of interbank markets and basic administrative provisions Become familiar with the standard 'boilerplate' provisions Understand the concept of due diligence Be able to deal with the transfer of loan obligations Master common banking expressions Who should attend: In-house lawyers in financial institutions Bankers concerned with the negotiation of loans Bank executives involved in the documentation of loans Lawyers in private practice who advise clients on loan agreements Corporate counsel
Day 1 Introduction The most common structures of loan transactions Single banks and syndicated loans 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 binding legal commitment? Workshop - Libor Funding & 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 & Administrative Provisions This session will involve an overview of the loan agreement and how it is structured to protect the lender, andan examination 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 Exercise As homework, participants will consider whether certain activities are prohibited by the loan documentation; and if so, which provisions are relevant. Day 2 Repeated Representations We will review the homework, the impact of repeating representations, and the interrelations betweendifferent parts of the document, both in a term loan and in a revolving credit. Covenants & Events of Default Typical covenants and events of default will be discussed, including: Purpose Financial covenants Cross default Material adverse change “Default” Covenants & Events of Default (contd) Glossary of Terms ‘Boilerplate’ Provisions & Loan Transfers Typical covenants and events of default will be discussed, including: 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 Review of Homework Exercise Security & Quasi Security Different types of security will be considered, including: Liens Pledges Charges (fixed and floating) Mortgages Title as an alternative We will also consider the different insolvency regimes in the UK and the circumstances in which security maybe set aside (or enforcement restricted) under English law. Guarantees The important provisions of a typical guarantee will be examined as will: Commercial benefit and transactions at an undervalue Common provisions of a guarantee Due Diligence What issues are relevent? Where to conduct due diligence Legal opinions Course ends