Undertakings Loan Agreements

For example, negative commitments are a commitment not to say that the existence of a union will not affect certain other provisions of an facility agreement. For example, there will also be a definition of “majority lenders” that is required for approval for certain measures. It is normal for this definition to amount to two-thirds of syndicated banks based on the amount of their interest in the loan. The borrower should ensure that all unionized banks are “qualifying banks” for the above reasons, and once again, an appropriate guarantee may be appropriate. (ii) the disbursement process, the timing of the loan`s execution and the guarantees that accompany the loan; Positive promises are promises to do certain things. This can be done at a time or at the lender`s request. Positive commitments generally relate to the provision of information or the provision and maintenance of loan security. The reason lenders ask for positive commitments is that they can monitor their exposure to risk and ensure that they have sufficient security. This section contains the insurance and guarantees, commitments and delays that apply to each facility.

It will also contain provisions that protect the bank from any change in circumstances that may affect its lending activities. (iii) the loan repayment plan, the applicable additional time and penalties for late payment; The majority of the agreements, as noted above, serve to play an economic role in ensuring that the relationship between the borrower and the lender is not compromised. The agreements control the actions that the borrower`s administration can take: Who have the potential to influence the lender`s interest rates.2 Thus, restrictions. B mergers and acquisitions are introduced so as not to alter the borrower/group with which the lender contracts, restrictions on the granting of loans/guarantees and the payment of dividends are also introduced to control the money the borrower pays to persons other than the lenders under the agreement. (ii) non-compliance with an agreement or the duration of the loan agreement; However, borrowers may negotiate that the repetition occurs only on the first day of each interest period or any date of interest rate decline, or in the event of a substantial change in the parameters of the loan, such as the extension or modification of a loan agreement. Borrowers should take note of the frequency of the necessary repetitions and, even if they are painful, ensure that the representations are accurate, as an offence can lead to a case of delay. An important point is that the emergence of the lender`s right to demand a late event does not automatically mean that the loan contract must expire. However, the lender must make a conscious choice to exercise its right. The parties can also take this opportunity to renegotiate the terms of the agreement. However, a lender generally reserves the right to expedite the repayment of the loan or another business facility6: these are generally divided into positive, negative and financial tariffs. Positive commitments include the obligation to provide financial information to the lender (for example. B audited management accounts).

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