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ISDA documentation in a finance transaction—checklist

ISDA documentation in a finance transaction—checklist This checklist sets out the key ISDA documentary requirements which need to be considered during the course of a financing transaction. Term sheet stage • if acting for a borrower and specialist hedging advisors are instructed, get their input on the term sheet • if acting for a borrower, ensure that the overall pricing of the transaction is understood (across both the loan and the hedging). A borrower may choose a particular lender based on a low margin offered on the loan, but then find that the credit spread on the swap offered by the same lender means that the overall economics of the transaction are less attractive than those offered by a different lender • is the loan and hedging on an IBOR basis (eg EURIBOR) or on a risk free rate (eg SONIA)? Will the loan transition from an IBOR to a RFR during its term and, if so, how will the hedging be dealt with? • does the lender require a...

Perfecting security in real estate finance transactions—checklist

Perfecting security in real estate finance transactions—checklist This Checklist sets out the steps which property lawyers need to take to perfect security in a real estate finance transaction. Real estate finance lenders will typically want to take a full security package over all of the assets relating to the real estate. A real estate lawyer in a multi-disciplinary team will likely be responsible for arranging or inputting into the following securities and documentation: • security over the land, rental income, insurance proceeds, development and construction and contractual rights • reviewing the management agreement and negotiating a duty of care agreement (although in a multi-disciplinary team, this is sometimes handled by the banking and finance lawyer) • dealing with completion undertakings and post completion registration of the legal charge at Companies House and HM Land Registry as well as giving third party notices regarding rent payment, notice of charge where necessary of assignment of contractual rights or warranties See Practice Notes: Security in real estate finance transactions, Taking security over land...

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Regulated mortgage contracts—flowchart

Regulated mortgage contracts—flowchart Background to and scope of this flowchart A person that carries on a regulated activity in the UK by way of business, where there is no applicable exclusion or exemption, must be authorised under the Financial Services and Markets Act 2000 (FSMA 2000). For more information on the implications of a person carrying on a regulated activity, see Practice Note: The general prohibition and implications of its breach. For more information about what it means to carry on business in the UK, see Practice Notes: What does 'by way of business' mean? and Territorial scope of the general prohibition. For more information about exemptions and exclusions that may be applicable, see Practice Notes: Regulated activities—exempt persons and Exclusions and exemptions relating to the general prohibition—an introduction. On 31 October 2004 (a date known as ‘M Day’), lenders and intermediaries of regulated mortgage contracts (RMCs) became regulated. The purpose of this flowchart is to set out the main questions to ask a person to determine whether or not...

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Finance party default—lenders

It isn’t only borrowers that can get into financial difficulties. Failure by a lender to meet its lending commitments under a loan agreement could have severe implications for the borrower, who may not be able to meet its own financial commitments. It is also likely to have knock on effects for other lenders who may find the borrower’s ability to make repayments is impacted.The Loan Market Association’s (LMA) recommended form of senior multicurrency term and revolving facilities agreement (compounded rate/term rate) for leveraged acquisition finance transactions (LMA leveraged facilities agreement), and the other LMA leveraged finance facilities agreements, contain provisions to help counteract some of the potential problems that may arise on syndicated facilities in the event that a finance party is at risk of not meeting its obligations. While the LMA recommended forms of investment grade documentation do not include the provisions, parties may decide to include them in other syndicated facility agreements. The standard form documentation is available to LMA members on the LMA website.Only a small proportion...

Renewable Heat Incentive—checklist on issues in property transactions

Renewable Heat Incentive—checklist on issues in property transactions Renewable heat incentive (RHI) The RHI, which applies to Great Britain, is a government scheme that provides financial incentives to increase the uptake of renewable heat and biomethane. These financial incentives are provided to help remove some of the barriers to adoption, such as high up-front costs and operational expenditure. The RHI scheme was split into two phases: • phase 1, which was introduced in November 2011 for non-domestic installations in the industrial, business and public sectors. The non-domestic RHI closed to new applicants on 31 March 2021 • phase 2, for the domestic RHI (previously covered by the Renewable Heat Premium Payment), which was rolled out in April 2014. The domestic RHI closed to new applicants on 31 March 2022 Although each of the non-domestic and domestic RHI schemes have now closed to new applicants, those accredited prior to closure may still be in receipt of payments under the scheme. The non-domestic RHI was originally put in place pursuant to the Renewable Heat Incentive Scheme Regulations 2011 (2011...

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Finance provisions—joint venture shareholders’ agreement

ALTERNATIVE 1: PROVISION FOR FUTURE LOANS BY SHAREHOLDERS Clause 1 Insert a new definition as follows (if not already included): Respective Proportion means, in relation to a Shareholder, the proportion which the number of Shares held by that Shareholder bears to the total number of issued Shares of the Company; Replace clause 9.3 with the following new clauses 9.3 and 9.4: 9.3 In the event that, at any time during the term of this Agreement, any such borrowings are not available or do not satisfy the working capital requirements of the Company as determined by the Board, each of the Shareholders, when requested from time to time, lend to the Company its Respective Proportion of the amount specified by the...

Conflicts guidelines—property transactions

Conflicts guidelines—property transactions Our Conflicts, confidentiality and disclosure policy sets out our general position on when we can act in conflict situations. We also issue guidelines for certain [departments OR types of work]. These guidelines illustrate how our policy could apply in different situations, but they are not intended to be exhaustive or rigid. In each situation covered by these guidelines we must consider whether a conflict arises and, if so, whether we can act. 1 Substantially common interest 1.1 We will not act for clients under the substantially common interest exception where: 1.1.1 we may need to negotiate on matters of substance between the clients, eg negotiating on price between a buyer and seller of a property 1.1.2 there is unequal bargaining power between the clients, eg where a builder is selling to a non-commercial client 1.1.3 one or both clients will be prejudiced by lack of separate representation 1.1.4 we cannot represent the client even-handedly, or 1.1.5 the clients’ interests in the end...

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What are unitranche facilities?

What are unitranche facilities? What is a unitranche facility? Leveraged finance transactions are traditionally funded by a mixture of equity, senior debt, mezzanine debt and/or bonds. A unitranche facility is effectively a blend of the senior and mezzanine portion of the financing although it can sometimes covers part of the equity too. Therefore, instead of two facilities agreements, covenant packages, sets of security documents etc, only one is required. Unitranche facilities are more common on mid-market deals. What are the typical terms of a unitranche facility? Unitranche facilities differ from deal to deal but some typical features are: • the facility will be in the form of a term loan; if a revolving credit facility (RCF) is also required it will normally be documented in the same agreement and share the same security package • bullet repayment or possibly with a back ended amortisation schedule • higher margin than senior debt but lower margin than mezzanine debt; margin may be a mixture of cash and PIK...

How might the European Commission proposal for new conflict of law rules for assigned claims impact the secondary loan market?

How might the European Commission proposal for new conflict of law rules for assigned claims impact the secondary loan market? Summary This Q&A refers to the European Commission’s proposal for a Regulation on the law applicable to the third-party effects of assignments (the Proposal) published on 12th March 2018, which could have an impact on the market for trading participations in syndicated and bilateral loans. Both of the Loan Market Association (LMA) and the City of London Law Society made representations asking for the Proposal to be shelved or at least amended to accommodate current market practice in the secondary loan market. Their representations are available on their respective websites. It is fair to say that in its original form the Proposal would have disrupted the secondary loan market by making due diligence on the part of a buyer much more complicated for the reasons given below. The UK indicated on 9 July 2018, shortly after publication of this Q&A, that it would not opt in...

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Banking and Finance weekly highlights—5 December 2024

This week's edition of Banking and Finance weekly highlights includes: (1) RICS announces updated Red Book Global Valuation Standards; (2) AFME releases report on UK capital markets; and (3) European Commission publishes FAQs on the EU taxonomy for sustainable economic activities.

UK investors denied appeal in Barclays dark pool claim

Law360, London: A High Court Judge refused on 27 November 2024 to allow UK investors to challenge his decision striking out claims worth £330m from securities fraud litigation alleging that Barclays dishonestly delayed publishing information about its dark pool trading system.