Loan Documentation & Security Issues

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1 Loan Documentation & Security Issues The salient commercial terms in loan documentation and an overview of collateral This course is presented in London on: 11 June 2018, 18 September 2018, 05 November 2018 The Banking and Corporate Finance Training Specialist

2 Background of the trainer The trainer is a consultant, public speaker and author. He provides training programmes globally to a blue-chip client base on private equity, debt finance, loan documentation and restructuring. He is a senior consultant with Debt Xplained, with Grant Thornton UK (Debt Advisory) and is also a Senior Advisor to KPMG Finland. He has spoken at conferences in the UK, Europe, Australasia & South Africa. He provides training to a wide range of clients on a bespoke in-house basis & publicly through Redcliffe Training Associates. Additionally, he is the Programme Director for the infrastructure / project Course finance Overview module for the MBA programme at the Cass Business School in London. Course Objectives Participants will: Understand about facilities in general and the different types Gain an overview of key documents and their uses Explore the key players in a loan & their roles, including the different departments Learn about issues relevant to syndicated (& club) deals Have explained the general approach to the loan from both lender and borrower perspectives Get to grips with the senior facility agreement the key commercial terms Be taught about the different types of security that will be applied Gain an understanding for registering & perfecting security Explore the likely implications of Brexit on loan documentation Course Overview The programme will review the impact of the draft ECB guidance on leveraged transactions. This course provides a full coverage of all of the important aspects of lending. It sets the scene by explaining the banks approach to lending, the roles of the key departments in the bank and the key documents in the process. The programme then proceeds to discuss where to focus in analysing the loan and examines the key commercial terms in the loan and security documents from the perspective of both the lender and the borrower. Reference is made to established case law (Spectrum) and to recent cases, such as Stabilus and Urvasco and their relevance to key clauses and aspects. Whilst Loan Market Association precedents are widely used as a point of departure for loans throughout Europe, there are a number of key clauses which are left blank for negotiation, in particular the various permitted baskets which need to be tailored on a case by case basis. Furthermore, syndicated (and club) loans raise additional issues which are not relevant in bilateral loans, such as voting thresholds and transfer restrictions. In view of the standardised approach to lending across Europe, the course is presented so that it has a pan-european relevance. The course will also discuss briefly the potential impact of Brexit on existing and new documentation. The longer term impact on loan documentation will depend upon what is agreed between the UK and the EU.

3 Course Content Facilities in general Investment grade vs high yield - key dividing line in credit markets, why & how it matters Preliminary issues for the borrower the 7 key aspects Types of bank facilities & key issues Committed vs uncommitted facilities Overdraft, term loans, RCFs, multiple option facilities, swingline facilities Obtaining a loan - bi-lateral vs club vs syndicated deals Key differences Repayment styles and what drives them Amortising vs balloon vs bullet Lenders approach to amortisation Overview: Key documents & their uses Commitment and mandate Letter Term sheet Fee letter The loan facility agreement Security documentation Case Study: Review key aspects of a sheet in the context of a relevant deal including the market flex The key players in a loan & their roles Dramatis personae in the loan (bilateral, clubs & syndicated) The mandated lead arranger Origination & syndication departments Credit department Portfolio department The facility agent & security agent key lessons from the Stabilus case Issues relevant to syndicated (& club) deals The various types of Lenders & what they want Banks, CDOs, institutional lenders, credit & hedge funds, direct lenders Role and importance of The Instructing Group Critical voting thresholds Transfer restrictions General approach to the loan The Lender s approach to the Loan The borrower s aims Interplay of the various models/scenarios How to read a loan facility agreement What to do and what not to do What are the key areas to focus on Generic drafting issues Materiality Reasonableness De minimis / permitted baskets Other conditional clauses (might, may, will, would etc) Further assurances provide less assurance since Ford v Polymer Vision Negotiating tactics in handling the banks What do the lenders want the 3 key areas Knowing where to focus your negotiating firepower

4 How to handle the lenders when things go wrong Different types of facilities use and key issues Overdraft - why these are unsuitable for corporates Term Loans Uses general corporate purposes, M&A, capex Typical terms Tranching and alphabet notes rationale and use Revolving credit facilities Typical terms & problem areas Fee /margin structure what s market for committed amounts Clean-downs why they matter, what to look for Rollovers & cashless rollovers (lessons from Lehman) Dealing with headroom The senior facility agreement the key commercial terms Primary loan senior facility agreements when and where are they used Scope of the Loan the Restricted Group - where and why it matters Permitted baskets what they are and why they matter Interest & fees Arrangement fees Commitment fees Typical margins Utilisation periods Use and interaction with hedging (SWAPS) Default vs. events of default and cross default LMA approach vs market Impact of a breach; theory vs practice Covenants generally Information General undertakings (the negative pledge & guarantor coverage test) Financial covenants typical covenants MAC / MAE Does it matter Impact of the recent Urvasco case Case Study: Discuss specific terms in the Senior Facility Agreement specifically various formulations of the MAC clause, the maintenance covenant package (which ones should be used and why), the role of the Permitted baskets Types of security Debentures defined (UK only) Companies Act (UK) approach vs case law (impact of recent Fons case) Mortgages Charges fixed vs floating Key differences Key issues for lenders & why it matters (Spectrum & Brumark Cases) Pledges Liens Security re intellectual property and contracts Security in the EU general approach Parallel debt arrangements Collateral in the US general approach

5 Case Study: Discuss some of the key issues affecting security from both lender s and borrower s perspective Registering & perfecting security Registering security interests created by companies & LLPs Charges created on or after 6 April 2013 Charges created before 6 April 2013 Charges created by overseas companies Registering security over land Registering security over intellectual property Priority between company mortgages and charges Methods of perfecting security The five key questions Impact of Brexit on loan documentation Events of default Mandatory prepayments (illegality) MAC clauses Force majeure Other matters (repeating reps, gross up) Passporting issues Governing Law and Jurisdiction What Redcliffe s clients are saying about the course; Excellent presentation and real life examples. Very knowledgeable presenter with a lot of varied experience Very clear explanation of the more technical areas The presenter clearly knows his stuff and this market allowing him to answer any questions thrown at him Very thorough Excellent anecdotal examples. Good cross section of participants from funds, Private Equity and Advisory

6 09:00-17:00 London Standard Price: 725 +VAT Membership Price: VAT In-House Training Delivering this course in-house for a number of participants could be very cost effective. The venue and timing can be agreed to suit the client, as well as the selection of the trainer and the precise contents of the seminar. E-Learning This course can also be presented as a bespoke e-learning programme created by you to fit your exact requirements.