Facility Agreement: secured term loan facility agreement
Secured facility agreement for a corporate borrowerÂ
Background
Why use a facility agreement?
A facility agreement is an arrangement under which a lender agrees to provide one or more loans to a borrower for a period of time and up to specified maximum amount. A facility agreement may be unsecured or secured.
The facility (if “committed, which means that the lender is committed to provide future loan advances to the borrower under the facility) will enable the borrower to borrow money (and start to pay interest on the amount advanced) when needed. In exchange for the commitment to lend money when requested, the lender is often paid a commitment fee equal to a percentage of the undrawn facility.
About this term loan facility agreement
This facility agreement is for a secured loan facility of to a maximum fixed amount to a corporate borrower. It is suitable for a borrower which is incorporated in England and Wales.
The security would need to be created and governed by a separate security document between the borrower and the lender, depending on the nature of the secured property and assets. Examples of security documents include:
- a charge over specified property
- a charge over shares
- a debenture, containing fixed and floating charges over all of the borrower’s assets and undertaking
Document features
Features include:
- 23 clauses and schedules over 15 pages
- Mechanism for the borrower to request advances, subject to satisfaction of conditions precedent
- Regular interest payments at either fixed or floating interest rate by reference to specified bank’s base rate of interest
- Repayment of all loans on a fixed repayment date, with borrower able to prepay in whole or in part
- Provision for an arrangement fee and facility commitment fee
- on a single repayment date or in instalments
- Undertakings to the borrower, including the provision of information to the lender and prohibition on granting security and additional borrowings
- Events of default
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