International Loan Documentation PDF
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International Loan Documentation Sue Wright INTERNATIONAL LOAN DOCUMENTATION This page intentionally left blank International Loan Documentation SUE WRIGHT © Sue Wright 2006 Softcover reprint of the hardcover 1st edition 2006 978-1-4039-4279-1 All rights reserved.No reproduction,copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced,copied or transmitted save with written permission or in accordance with the provisions of the Copyright,Designs and Patents Act 1988,or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency,90 Tottenham Court Road,London W1T 4LP. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted her right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act 1988. First published in 2006 by PALGRAVE MACMILLAN Houndmills,Basingstoke,Hampshire RG21 6XS and 175 Fifth Avenue,New York,N.Y.10010 Companies and representatives throughout the world. PALGRAVE MACMILLAN is the global academic imprint of the Palgrave Macmillan division of St.Martin’s Press,LLC and of Palgrave Macmillan Ltd. Macmillan® is a registered trademark in the United States,United Kingdom and other countries.Palgrave is a registered trademark in the European Union and other countries. ISBN 978-1-349-52158-6 ISBN 978-0-230-51479-9 (eBook) DOI 10.1057/9780230514799 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Wright,Sue,solicitor. International loan documentation / Sue Wright. p.cm.— (Finance and capital markets series) Includes bibliographical references and index. 1.Loans,Foreign – Law and legislation.2.Commercial loans – Law and legislation.3.Loans,Foreign – Law and legislation – Great Britain. 4.Commercial loans – Law and legislation – Great Britain.I.Title.II.Series. K1094.3.W75 2005 658.15(cid:2)242—dc22 2005044651 10 9 8 7 6 5 4 3 2 1 15 14 13 12 11 10 09 08 07 06 For Dave, Amy, Leo, Hilary and Claude This page intentionally left blank Contents List of Statutes, Regulations, Directives and Conventions xi List of Cases xiv Acknowledgements xvi Introduction 1 General Introduction 1 Section 1: Principal Types of Loans 3 Section 2: Loan Agreement Overview 7 Section 3: LIBOR-Based Lending 13 Section 4: Scope of the Loan Agreement 17 Section 5: Asset and Project Finance 24 Section 6: Quasi Security and Financial Indebtedness 28 PART I Administrative Provisions 1 Interpretation 35 Clause 1: Definitions and Interpretation— Section 1—An Introduction 35 Section 2—The LMADefinitions 38 2 The Facility 56 Clause 2: The Facility 56 Clause 3: Purpose 59 Clause 4: Conditions of Utilization 60 vii viii CONTENTS 3 Utilization 67 Clause 5: Utilization 67 Clause 6: Optional Currencies 70 4 Repayment, Prepayment, and Cancellation 74 Clause 7: Repayment 74 Clause 8: Prepayment and Cancellation 74 5 Costs of Utilization 80 Clause 9: Calculation of Interest 80 Clause 10: Interest Periods 83 Clause 11: Changes to Calculation of Interest 87 Clause 12: Fees 91 6 Additional Payment Obligations 93 Clause 13: Tax Gross-up and Indemnities—Introduction 93 Clause 13: Tax Gross-up and Indemnities 94 Clause 14: Increased Costs 100 Clause 15: Indemnities 104 Clause 16: Mitigation 105 Clause 17: Costs and Expenses 105 PART II Guarantee, Representations, Undertakings, and Events of Default 7 Guarantee 109 Clause 18: Guarantee and Indemnity 109 8 Representations, Undertakings, and Events of Default 117 Clause 19: Representations Section 1—An Introduction 117 Section 2 —The LMA Term Loan Representations 124 Clause 20: Information Undertakings 137 Clause 21: Financial Covenants 141 Clause 22: General Undertakings Section 1—The LMAUndertakings 147 Section 2—Other Common Undertakings 158 Clause 23: Events of Default Section 1—Introduction 165 Section 2—The LMAEvents of Default 168 CONTENTS ix Part III Boilerplate and schedules 9 Changes to Parties 187 Clause 24: Changes to Lenders Section 1—Methods of Transfer 187 Section 2—Transfers of Secured Loan 196 Section 3—The LMATerm Loan 201 Clause 25: Changes to the Obligors 206 10 The Finance Parties 210 Clause 26: Role of the Agent and the Arranger 210 Clause 27: Conduct of Business by the Finance Parties 217 Clause 28: Sharing among Finance Parties 217 11 Administration 221 Clause 29: Payment Mechanics 221 Clause 30: Set Off 224 Clause 31: Notices 224 Clause 32: Calculations and Certificates 225 Clause 33: Partial Invalidity 227 Clause 34: Remedies and Waivers 227 Clause 35: Amendments and Waivers 228 Clause 36: Counterparts 229 12 Governing Law and Enforcement 230 Clause 37: Governing Law 230 Clause 38: Enforcement 230 13 Schedules 233 Schedule 1: Parties 233 Schedule 2: Conditions Precedent 233 Schedule 3: Requests 241 Schedule 4: Mandatory Cost Formula 241 Schedule 5: Form of Transfer Certificate 242 Schedule 6: Accession Letter 243 Schedule 7: Form of Resignation Letter 244 Schedule 8: Form of Compliance Certificate 245 Schedule 9: Existing Security 246 Schedule 10: Form of Confidentiality Undertaking 246 Schedule 11: Timetables 246 Schedule 12: Legal Opinions 247
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