Loan documentation is a critical component in the lending process as it transforms the transaction into a legally enforceable form and clarifies the transaction so that each party understands the details of the lending arrangement. However, most companies face difficulties in effectively structuring, drafting and negotiating key clauses within the loan agreement to safeguard them from potential risks and legal consequences.
The problem here is that many companies are unable to effectively analyze key clauses within the loan documents to identify potential issues and legal risks. In addition, they have poor knowledge of the different financial options available and are ineffective in aligning the loan terms with the business objectives. Many also highlighted the difficulty in negotiating and achieving win-win situation for both lenders and borrowers.
Without in-depth knowledge, effective techniques and powerful negotiation strategy to critically analyze and draft an effective loan document, companies may face serious issues of poor enforceability of loan agreement, misrepresentations of clauses and terms and potentially high legal risks and heavy costs.
Designed for loan documentation professionals, this comprehensive 2-day program is designed to provide you with effective techniques and powerful strategies to accurately analyze, structure and negotiate a well-protected loan agreement to achieve your commercial needs.
Led by Michael Twomey, widely recognized as leading contract lawyer with over 25 years of immaculate track record, he will provide you with strategic perspectives of the finance options available and how to select the best loan option to achieve your commercial needs. He will also show you effective frameworks and techniques for detailed clause-by-clause analysis of your loan documents including representations, boilerplates, warranties, covenants, indemnities and event of defaults so as to accurately pinpoint potential issues and legal risks and mitigating them before signing off. Furthermore, you will master effective techniques and strategies to draft, structure and negotiate these key clauses such that it fully addresses the lenders’ and borrowers’ concerns and fulfill all parties’ objectives for a win-win outcome.
Packed with real-life case studies and interactive discussion sessions, you will leave this program with practical skills, powerful techniques and in-depth knowledge to ensure an effective loan documentation and safeguard your organization from potential legal consequences and costs.
Overview of Finance Options
• What is the best option to meet the commercial objectives?
• Short/medium-term/long-term funding
• Terms loans and revolving credit facilities
• Committed or uncommitted
• Bilateral or syndicated
• Secured or unsecured
• On-demand or not on-demand
• Swingline facilities
• Amortizing, balloon, and bullet repayment
Understanding Lenders’ and Borrowers’ Concerns and Objectives
• Identifying the concerns of the lender and the borrower
• Necessary checks to identify and deal with these concerns
• Case study advising the parties on risk mitigation
• Key clauses to meet the objectives of the parties
Reviewing the Loan Processes
• The practicalities and process of raising loan finance
• Credit approval, due diligence
• Negotiating, drafting and agreeing the term sheet
• Agreeing the wording of conditions precedent
• Consideration of draft clauses setting out conditions precedent
• Drawdown and utilization: the process
• Utilization periods
Understanding the Full Cost to the Borrower
• What are the total costs of the loan?
• Fees, charges and expenses
• Taxes and increased costs
• Arrangement fee
• Commitment fee
• Mandatory costs
• Costs for early repayment
• Matched funding
Understanding and Agreeing the Conditions Precedent (CP)
• Drafting and negotiating the CPs
• Satisfying the conditions precedent on initial and subsequent drawdowns
Key Clauses and Documentation Structure of Loan Agreement Time periods
• The importance of time clauses in loan agreements
• Case study exercises on the meaning and application of terms relating to time periods
• The drafting of time provisions
• The purpose clause
• The importance and legal and commercial effect of a purpose clause
Key Clauses and Documentation Structure of Loan Agreement
Representations and Warranties
• Understanding the nature of and the importance reps and warranties
• Repeating representations
• How to negotiate the wording and extend of the reps and warranties?
• Case study – amending the draft reps and warranties
• Categories of covenants: information, financial and non-financial
• Understanding the scope of positive and negative covenants
• Understanding the financial covenants
• Key financial covenants
• Case study – problem solving regarding an alleged breach of a covenant
Indemnities in Loan Agreements
• Case study: what does the indemnity cover?
• Interpretation of indemnities
• Drafting effective indemnities
• Complying correctly with requirements set out in indemnities
Key Issues and Hazards with Loan Agreement Events of Default
• What amounts to an event of default?
• Monitoring for prospective events of default
• Options when faced with an event of default
• Consequences of an event of default
Assignment and Transfer
• Understanding the assignment and transfer provisions in a loan agreement
• Novation, assignment and sub-participation
Market Disruption, Force Majeure, Material Adverse Change
• Mitigating the scope and effect of these provisions
• “Boilerplate” clauses
• Amendments, waivers and consents
• Calculations and certificates
• Choice of law and jurisdiction
Evaluating Security and Quasi-Security and Its Importance
• What security can a borrower offer?
• What are the different types of security?
• What security should a borrower offer?
• What should be done to perfect the security?
• What is meant by “quasi-security” and is this feasible for the parties?
• Essential checklist when seeking a guarantee