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 precontractual 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:
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Be guided through the essential elements of various loan transactions
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Learn how to negotiate representations, covenants and events of default from both a lender's and borrower's perspective
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Gain a thorough understanding of the real value of security
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Recognise pre-contractual issues and the legal nature of a letter of commitment
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Improve your knowledge of interbank markets and basic administrative provisions
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Become familiar with the standard 'boilerplate' provisions
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Understand the concept of due diligence
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Be able to deal with the transfer of loan obligations
- Master common banking expressions
Who should attend:
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In-house lawyers in financial institutions
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Bankers concerned with the negotiation of loans
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Bank executives involved in the documentation of loans
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Lawyers in private practice who advise clients on loan agreements
- Corporate counsel
Day 1
Introduction
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The most common structures of loan transactions
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Single banks and syndicated loans
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Term loans and revolving credit facilities
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Single currency and multi-currency facilities
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Loan and guarantee facilities
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Secured and unsecured facilities
Pre-contractual issues
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What issues should it address?
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How much detail should it contain?
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Is it intended to create a binding legal commitment?
Workshop: 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:
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 the “mechanical” provisions of a typical loan agreement, such as the payments clause and the procedures to be followed on drawdown.
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Drawdown procedures
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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 epresentations and the interrelations between different parts of the document, both in a term loan and in a revolving credit.
Covenants and events of default
Typical covenants and events of default will be discussed, including:
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Purpose
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Financial covenants
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Cross default
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Material adverse change
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“Default”
Glossary of terms
‘Boilerplate’ provisions and loan transfers
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Set-off clause
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Indemnities
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Agency clause
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Pro-rata sharing clause
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Loan transfers
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Novations
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Assignments
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Sub participations
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Derivatives
Homework exercise: calculate the likely recoveries of different classes of creditors in a winding up.
Day 3
Review of homework exercise
Security and quasi security
Different types of security will be considered, including:
We will also consider the different insolvency regimes in the UK and the circumstances in which security may be set aside (or enforcement restricted) under English law.
Guarantees
The important provisions of a typical guarantee will be examined as will:
Due diligence
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Sue Wright
Sue is a solicitor with over 20 years' experience in international banking transactions, including syndicated loans, subordinated debt, structured finance and tax driven transactions. Sue was a partner in the banking department at Norton Rose for 8 years and was responsible for training banking assistants in Norton Rose for 2 years. Sue has been highly recommended as one of the leading experts in her field by Legal 500 and by Chambers. Sue was head of Professional Development at Herbert Smith and is now running an independent training consultancy specialising in training in international banking transactions and structured finance.
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