Loan Documentation School

Euromoney Learning Solutions

How long?

  • 5 days
  • online

Euromoney Learning Solutions

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About the course

Understand the documentation of a loan transaction and it's legal requirements

Our new, Virtual Loan Documentation School (Modular) consists of two separately bookable modules, tailored for virtual delivery with exercises, workshops, polls, group discussions and lots of interactivity built in to help delegates get the most out of the classes and interact with the trainer and other delegates in the virtual world.

  • Module 1: Loan Documentation
  • Module 2: Advanced Loan Documentation

Module 1 focusses on the core loan agreement in the context of unsecured lending and Module 2 builds on that, with more extensive workshops on the loan agreement as well as discussion of the other documents in a loan financing package – the security, intercreditor arrangements and legal opinions – so as to give an in depth understanding of the whole documentation package.

Delegates wanting to book module 2 only will need to have a working knowledge of the topics covered in module 1 as explained further in the discussion of prerequisites for Module 2 below.

*Loan Documentation *

This module takes place over three short (5 hours) days and covers the documentary aspects of a loan transaction, concentrating particularly on the loan agreement itself. The course will provide a clause-by-clause analysis of the loan agreement, as well as a road map of the documentation enabling you to find your way around the document with ease.

You will be taken step-by-step through the documentation, from the early stages of the borrower’s financing choices and different types of loans, through to administrative provisions, representations, undertakings, defaults, transfer provisions, and role of the Agent in a syndicated loan, focussing on the key commercial issues. Through the group discussions and workshops you will have plenty of opportunity to test your understanding and put your learning into practice

By attending this course, you will fully understand the commercial implications of the loan documentation and the key issues to watch out for

You will:

  • Understand the structure of the documentation and how the various provisions interlink
  • Learn how to spot the key commercial issues quickly
  • Become familiar with the interest rate, increased costs and withholding tax and FATCA provisions and the regulatory issues which help to shape them
  • Appreciate why LIBOR is being phased out and the steps being made towards its replacement
  • Appreciate the significant issues in the representations, repeating representations, undertakings and events of default from both a lender’s and borrower’s perspective
  • Become familiar with the structure of security documentation and the importance of the application of funds clauses

Key topics covered include:

  • Title financing (or quasi security)
  • Default (as opposed to Event of Default)
  • “continuing” Events of Default
  • LIBOR discontinuation and replacement
  • Witholding tax and the gross up clause
  • FATCA
  • The role of the representations and repeating representations
  • Negative pledge
  • Pari passu
  • Financial ratios
  • Cross default
  • Material adverse change clause
  • The role of the Agent in a syndicated loan
  • Methods of transferring loans
  • Reservation of rights letters

Advanced Loan DocumentationThis module takes place over two short (5 hours) days and builds on Module 1 - our ever popular “Loan Documentation” program. This module gives delegates the opportunity to debate some of the key clauses in the loan agreement (and discussed in Module 1) in a highly practical workshop. For this purpose delegates will be expected to have a working knowledge of the key clauses and issues listed in the section on prerequisites

The course also looks at how the commercial context will affect the documentation - focussing in particular on project and asset finance. Finally, it also covers the other documents in a loan financing package – the security, intercreditor arrangements and legal opinions and the issues which those documents address.

This course will help you

  • Consolidate your understanding of the commercially important points in the documentation package
  • Appreciate the linkage between different documents in the financing package
  • Master the important legal issues which commonly arise in a financing transaction including what can go wrong, where, and how to minimise the risks of this happening
  • Improve your understanding of intercreditor agreements and of the different types of subordination
  • understand the key features of asset and project based loans and
  • understand the impact of security on the documentation and on the transaction process

Prerequisites

Delegates will need to have a working knowledge of the following topics. These topics will either not be covered at all on this course, or, where they are discussed, the discussion will be at a detailed level, requiring participants to already understand the basics. If you are unfamiliar with any of these please attend the “Loan Documentation” course first.

  • Title financing (or quasi security)
  • Default (as opposed to Event of Default)
  • “continuing” Events of Default
  • LIBOR discontinuation and replacement
  • Witholding tax and the gross up clause
  • FATCA
  • The role of the representations and repeating representations
  • Negative pledge
  • Pari passuCross default
  • Material adverse change clause
  • The role of the Agent in a syndicated loan
  • Methods of transferring loans
  • Reservation of rights letters

Agenda

Day 1

Introduction - 1 hours

  • Financing choices
    • debt/equity;
    • loan markets/capital markets;
    • long term debt/current liabilities
  • Loan types
    • single bank /syndicated;
    • term/revolver;
    • project/corporate/asset/limited recourse;
    • loan/l/c/guarantee facilities

Key Issues - 30 minutes

We will discuss the overarching issues which lenders and borrowers will be watching out for when reviewing the documentation – including a workshop where participants will discuss key issues in practice

  • Certainty
  • Robustness
  • Scope
  • Money issues
  • Control
  • Other?

Interest - 1 hours

  • Different interest rate options
  • Impact of Basle regulations
  • Risk free rates and the transition from LIBOR
  • Default Interest
  • Witholding tax, gross up and FATCA

Document Overview - 30 minutes

  • Overview of the loan agreement and security documents
  • What is where and why?
  • How to find your way around the documentation quickly

Workshop – find clauses on set topic in the specimen loan agreement – 30 minutes

Mechanical Provisions - 1 hour

  • Issues with Definitions
    • Circularity
    • Moving definitions
    • Operative provisions
    • Uncapitalized definitions
    • Multiple application
    • context
  • Some key definitions
    • Break costs
    • Default
    • Defaulting Lenders
    • Financial Indebtedness
    • GAAP
    • Group
    • Majority Lenders
    • Continuing

Day 2

Workshop – participants will explain key expressions used in international finance - 40 minutes

Mechanical provisions continued Drawdown and conditions precedent - 40 minutes

  • Prepayment
  • Sanctions
  • Increased costs
  • Change of control

Representations - 1 hour

  • Purpose
  • Topics of representations including
    • Common comments on Information representation
    • Pari passu
    • Litigation

Repeating representations workshop - 40 minutes

This workshop aims to help participants to identify the impact of repeating representations and the interrelation between repeating representations and other parts of the document

Undertakings - 1 hour

  • Information Undertakings
  • Financial ratios
    • Purpose
    • Limitations
    • Common ratios
  • General Undertakings including
    • negative pledge and
    • no disposals

Day 3

Events of Default - 2 hours

  • Big Picture
    • Purpose and mechanics
    • Default
    • Remediable Events of Default?
      • Cross default
      • Other Events of Default
      • Material Adverse Change

Workshop - 1 hour

Participants will review a set of negotiated Events of Default to spot key issues commonly negotiated

Boilerplate - 1 hour

  • Loan transfers
    • Novation
    • Assignment
    • Subparticipation
    • Credit derivatives
  • Agent’s role and protections
  • Anti estoppel clause and reservation of rights letters

Day 4

The Loan Agreement in different contexts - 1.5 hours

  • Structural issues
    • Group or individual borrower?
    • Lending to spe
    • Structural subordination
  • Corporate, project and asset finance

Loan Agreement Workshop - 2.5 hours

  • Review borrower’s comments on a loan agreement and decide on lender’s response
  • Review workshop

Day 5

Intercreditor issues - 1.5 hours

  • Subordinated debt and subordinated security
  • Different methods of subordination of debt
  • The issues to be addressed by an intercreditor agreement
  • Review clauses from an intercreditor agreement

Security - 1.5 hours

  • Workshop
  • application of funds clauses
  • Impact on documents and transaction
  • Types of security
  • Guarantees

Due diligence and legal opinions - 1 hour

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 contacts

Experts

Sue Wright

Sue Wright is a solicitor with over 18 years experience in international banking transactions, including syndicated loans, subordinated debt, structured finance and tax driven transactions. She was a partner in the banking department at Norton Rose for 8 years and was responsible for training ass...

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Loan Documentation School at Euromoney Learning Solutions

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Disclaimer

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