Loan Documentation e-Learning

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Overview

Course Overview & Target Audience

This course is designed for bankers and lawyers and anyone else who is involved in international finance and needs to understand the documentation. The courses are suitable for experienced users and those with no prior experience of the subject matter. It is useful for beginners, to give them a comprehensive review of the loan agreement and the issues it raises. It is also useful for those with practical experience but who have not previously had any formal in depth training on the agreement, to help them fill in the inevitable gaps in their knowledge and to give them a framework in which to consolidate their practical knowledge. It is also useful as a refresher. The course uses extracts and specimen clauses from a version of the investment grade Loan Market Association (LMA) loan agreement as the basis for discussions.
 

By the end of this course, participants should:

  • Understand the structure of the loan agreement (investment grade, unsecured) and the relationship between its various provisions
  • Be able to review a loan agreement for an investment grade borrower and identify key issues such as the scope of the agreement
  • Be aware of the importance of the detailed provisions of the loan agreement and be able to negotiate some of the points commonly raised on those provisions

  
Time Requirement

The course involves around 10 to 15 hours work over an agreed period of weeks (ideally 4 weeks). This route covers those essential topics which participants need to be aware of when dealing with a loan transaction.

A second route is available which requires background reading in addition to the texts on the site. This route requires 30 to 40 hours work over an agreed period (ideally 5 weeks).

Delegates can decide as they progress through the materials how much depth they want to go into and move from one route to another as they wish. There are different quizzes depending on which route is followed and delegates will be awarded the appropriate certificate depending on which set of quizzes they completed successfully.

 
Materials

The materials consist of short interactive videos, quizzes and a forum for discussions. Delegates will be required to post a satisfactory report and question in the forum (and feedback on each of these will be given by the course tutor) as well as passing the quizzes in order to be eligible for a certificate.

The course materials available online are self contained and no other materials are required in order to complete the 'Key Facts' route through the study course. This route will give participants a good understanding of the key issues.

Delegates who wish to undertake the second route through the course will need to have a copy of the book 'International Loan Documentation' by Sue Wright, to be able to participate, as this route involves background reading from the book. 

  
Free Trial Lesson

Click here and turn up the volume to take part in a 10 minute free trial lesson. Download the accompanying worksheet here.

 
Registration & Pricing

Pricing is per participant. The price is the same whether the delegate chooses to do the 'Key Facts' or the in depth route.

Delegates can start the course on the Monday following the week in which they register. You can register or enquire by using the registration tab above.

Who should attend

Related Courses

Agenda
Stage 1
General Introduction and Administrative Provisions


Part 1 - Introduction

  • Lesson 1: A Company's Overview
    - Debt vs. equity
    - Capital markets vs. loan markets
    - Loan agreement structure
     
  • Lesson 2: Structural Subordination
    - What is it?
    - What impact does it have on loan undertakings?
    - Use of upstream guarantees
    - Locations for due diligence


Part 2 - Administrative Provisions of the Loan Agreement

  • Lesson 1: General Definitions
    - Including circularity
    - Moving definitions
    - Uncapitalised definitions
    - Avoiding the traps
     
  • Lesson 2: Specific Definitions
    - Including finance documents
    - Material adverse effect
    - Reference banks
     
  • Lesson 3: Financial Indebtedness
    - The definition explained including title financing such as finance leasing and repos
     
  • Lesson 4: Drawdown and Repayment
    - Lenders’ rights and obligations
    - Conditions precedent
    - Multicurrency mechanics and prepayment


Stage 1 Quiz


Stage 2

Interest, Representations and Repeating Representations


Part 1 - Interest

  • Lesson 1: Interest Rates and Funding Costs
    - Base rate
    - Central bank rates
    - Basel III liquidity ratios
    - Funding costs
     
  • Lesson 2: LIBOR
    - Screen rate
    - Base rate
    - Reference banks
     
  • Lesson 3: Interest Periods
    - Broken funding costs
    - Default interest and penalties 
    - Interest periods in revolving credits
     
  • Lesson 4: Additional Costs (Part 1)
    - The market disruption clause
     
  • Lesson 5: Additional Costs (Part 2)
    - The Increased Costs clause
     
  • Lesson 6: Withholding Tax (Part 1)
    - Withholding tax
    - Grossing up
    - Double tax treaties
    - Gross up and loan transfer
    - FATCA
     
  • Lesson 7: Witholding Tax (Part 2)
    - Risk allocation
    - The clawback clause
    - Loan transfers


Part 2 - Representation and Repeating Representations

  • Lesson 1: Representations
    - Obligors and Group members
    - Role of representations in risk allocation
    - Litigation
    - Pari passu
    - Litigation and breach of contract representations
     
  • Lesson 2: Repeating Representations
    - Hazards
    - Discussion of which representations to repeat


Stage 2 Quiz


Stage 3

Undertakings and Introduction to Events of Default


Part 1 - Undertakings

  • Lesson 1: Information Undertakings
    - GAAP and IFRS
    - Frozen and moving GAAP provisions
    - Auditors’ certificates and other information undertakings, including the obligation to notify of a Default
     
  • Lesson 2: General Undertakings
    - The negative pledge
    - The no disposals clause
     
  • Lesson 3: Financial Covenants (Part 1)
    - Relationship with the material adverse change and cross default clauses
    - Review of interest cover, leverage and cash flow ratios
     
  • Lesson 4: Financial Covenants (Part 2)
    - Gearing
    - Liquidity
    - Tangible Net Worth
    - Capital expenditure
     
  • Lesson 5: Scope of the Agreement
    - Group members, Obligors and Excluded Companies
    - Change of ownership or control of the company

 
Part 2 - Introduction to Events of Default

  • Lesson 1: Events of Default - The Big Picture
    - Objective vs. subjective Events of Default
    - Scope of the agreement
    - Robustness, particularly in view of the cross default clauses
    - Events of Default outside the Borrower’s control
     
  • Lesson 2: Event of Default - Purpose and Mechanics (Part 1)
    - The role of the Events of Default in: 
          -  Allocating risk
          - Giving the Lenders leverage
    - Automatic and non automatic Events of Default
    - Borrower’s right to remedy an Event of Default which has occurred
    - Events of Default and default interest
     
  • Lesson 3: Events of Default – Purpose and Mechanics (Part 2)
    - Defaults and Events of Default
    - 'Rollover Loans' in a revolving credit facility
    - Effect of disputed Event of Default on acceleration


Stage 3 Quiz & Compulsory Report

Stage 4

Events of Default and Boilerplate


Part 1 - Events of Default

  • Lesson 1: 'Breach of Contact' Events of Default
    - Non payment
    - Failure to meet financial ratios
    - Breach of undertaking and misrepresentation
     
  • Lesson 2: Other General Events of Default
    - Insolvency
    - Litigation
    - Change of control
    - Illegality
     
  • Lesson 3: Cross Default Purpose
    - Spiralling effect
    - Cross default vs. cross acceleration
    - Ways in which the borrower may seek to reduce the impact of the clause
     
  • Lesson 4: Material Adverse Change
    - Arguments for and against
     
  • Lesson 5: Material Adverse Change
    - Wording


Part 2 - Boilerplate

  • Lesson 1: The Agent’s Role and the 'Boilerplate'
    - Fiduciary duties
    - Exclusion clauses
    - Other 'boilerplate' clauses, including:
         - The pro rata sharing clause
         - The anti estoppel clause
         - The jurisdiction clause
         - The clause dealing with waivers and amendments
     
  • Lesson 2: Transfer Methods
    - Assignments
    - Novations
    - Subparticipations (funded and risk)
    - Credit derivatives
     
  • Lesson 3: Transferring Secured Loans
    - The options for structuring secured syndicated loans
     
  • Lesson 4: The Transfer Clause Borrower
    - Concerns
    - 'Yank the bank'
    - Confidentiality


Part 3 - General

  • Defaulting Lenders
    - Addressing issues which arose during the financial crisis of 2008

 
Course End

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