Lma Template Facility Agreement

„It`s LMA“ is every bank lawyer`s preferred justification for a negotiating position, and UK banks are increasingly asking their lawyers to prepare installation agreements in LMA format. But what is the „LMA“? The Loan Market Association (LMA) publishes two types of recommended forms of facility agreements: investment-grade financing and leveraged finance (LF). As Adam Pierce explains, some points of detail are only included in the LF agreement and that can be included in the installation agreements, regardless of the type of transaction. Under the market disturbance clause, when a market disruption event occurs, each lender`s actual cost of capital is used to calculate the interest rate on its loans instead of LIBOR. Include a „LIBOR floor“ in this clause so that no lender suffers from this clause if their cost of funds is less than LIBOR. The uaA agreement now contains this pattern. Updated the gross tax clause and corresponding timetables to reflect the entry into force of HMRC`s double taxation agreement in September 2010. The LMA has made a number of changes to its LF agreement, but has not yet updated its investment grade agreements. For a syndicated transaction that includes a letter of credit facility, consider including the „Unacceptable L/C Lender“ provisions if you are the issuing bank or acting on its behalf.

The issuing bank relies on compensation from lenders for their obligations under any L/C issued by it. These provisions allow the issuing bank to require additional protection (including a cash guarantee) if a lender becomes an unacceptable L/C lender (e.B because its credit score falls below a required level). Therefore, a number of recent amendments to the LF Agreement are in no way specific to leveraged financing, but are not included in investment quality agreements. Therefore, if you are drafting or revising an installation agreement based on the LMA Investment Quality Agreements, you must adopt the following terms of the LF Agreement. Add definitions for „significant adverse effects“ and in the „Change of control“ clause for „Control“ and „Joint Action“. The definitions of investment grade agreements are empty. Definitions of these terms in the LF agreement (which are not new) may not always be appropriate and often need to be simplified when used outside of leveraged financing. However, they are a reasonable starting point.

Some conditions you should consider from the LF agreement If you have a revolving facility, add compensation provisions in the refund section. Revolving loans have a term of only one interest period. At the end of each interest period, the borrower will typically want to partially or fully refinance their existing revolving loans by drawing on new loans. In practice, lenders or borrowers simply make a net payment to the extent that the outstanding amount of revolving loans increases or decreases. Since June 2009, the LF agreement recognizes that lenders and borrowers only have to make these net payments. We have published a note entitled „Documentary Implications of the End of the Brexit Transition Period for the Documentation of the LMA Facility“ („Brexit Note“), which consolidates and updates previous Brexit notes published in September 2016 and April 2019 and two tables on EU legislative references below. Add the phrase „warranty intent“ to the warranty clause. It can be difficult for lenders to execute collateral if the terms of the underlying loan are subsequently changed without the guarantor`s consent.

However, a lender may be in a better position if it can demonstrate that the guarantor and the lender were considering the appropriate type of change at the time of the guarantee. The phrase „Guarantor`s Intention“ in the UAA agreement attempts to resolve this issue. These documents (this term includes, where context permits, text, content, spreadsheets with macros and electronic interfaces, as well as underlying assumptions, transformations, formulas, algorithms, calculations and other mathematical and financial techniques) are provided to members of the Loan Market Association in accordance with the Bylaws of the Loan Market Association (a copy of these is available here), facilitate the documentation of transactions in credit markets. None of the Loan Market Association, Allen & Overy or Clifford Chance accepts any responsibility for the use of these materials or for any loss, damage or liability arising from such use. None of the members of the Loan Market Association, Allen & Overy or Clifford Chance have reviewed the laws of any jurisdiction that could apply to either party to an agreement using these documents and their subject matter. Members should therefore review all relevant legal, accounting and regulatory matters before using these documents or entering into a transaction between them and, where appropriate, consult with their professional advisors. We have published a revised draft agreement on the trading system (revision without deferral); new draft agreement on the interchangeable device (revision with observation lag); revised commentary on collective agreements; Term sheet for collective agreements; and the terms of use of the RFR with supplement to the revised replacement of the screen rate language. Amend the „Reference Bank“ portion of the LIBOR definition so that LIBOR is the average of the interest rates at which reference banks indicate that they can raise funds in the interbank market at the relevant time. In the equivalent definition, investment grade agreements always refer to the interest rates that reference banks „quote“. to offer deposits“ and not for their actual cost of money. The [basic] reference rate in the UAA agreement (which is included in the LIBOR definition) is an average real cost rate of the borrowing rate […].