Loan Documentation e-Learning

Euromoney Learning Solutions

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Euromoney Learning Solutions

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About the course

Boost your knowledge of the loan documentation process with this online, self paced course

This course is designed for bankers and lawyers and anyone else who is involved in international finance and needs to understand the documentation. The courses are suitable for experienced users and those with no prior experience of the subject matter. It is useful for beginners, to give them a comprehensive review of the loan agreement and the issues it raises. It is also useful for those with practical experience but who have not previously had any formal in depth training on the agreement, to help them fill in the inevitable gaps in their knowledge and to give them a framework in which to consolidate their practical knowledge. It is also useful as a refresher. The course uses extracts and specimen clauses from a version of the investment grade Loan Market Association (LMA) loan agreement.

By the end of this course, participants should:

  • Understand the structure of the loan agreement (investment grade, unsecured) and the relationship between its various provisions

  • Be able to review a loan agreement for an investment grade borrower and identify key issues such as the scope of the agreement

  • Be aware of the importance of the detailed provisions of the loan agreement and be able to negotiate some of the points commonly raised on those provisions

Time Requirement

The course involves around 10 to 15 hours work over an agreed period of weeks (ideally 4 weeks). This route covers those essential topics which participants need to be aware of when dealing with a loan transaction.

Materials

The materials consist of short interactive content and quizzes. Delegates will be required to pass all quizzes in order to be eligible for a certificate.

The course materials available online are self contained and no other materials are required in order to complete the study course. The materials give participants a good understanding of the key issues.

Agenda

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

Videos and materials

Loan Documentation e-Learning at Euromoney Learning Solutions

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