A Note On The New Baltic Bank

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Considering that this is the first time the New Baltic Bank enters to a syndicated loan, I will point out the important key clauses that you should be looking for in a loan agreement. The loan agreement is the document set out by the Lender, which is in this case, is the bank to provide the terms and conditions of the loan that will be given to the borrower. The structure of the agreement must have a few components such as representations, warranties, covenants and duties.
The Loan Market Association along with major city law firms and the Association of corporate treasures have introduced recommended forms of primary loan documentations . This document as recommended by the LMA has the main clauses that should be incorporated in the loan
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Similarly, clauses related to the agent bank discretionary powers, majority and minority lenders, Pro rata clauses and consents.

As for material adverse changes clauses they enables one of the parties; which is the lender, with a degree of protection and the ability to refuse to complete obligation if the borrower suffers change in circumstances that would affect his ability to continue his obligations with the lender. For Material Adverse changes can function as an event of default or potential event of default. The Material Adverse changes can either stops the drawing down of the loan or a basis for ending the lenders obligations, and it can also accelerate the loan and the lender could demand the borrower for an early payment.
Representations and warranties focus on the borrower’s ability legally to enter into a financial agreement. In case of breach in the representations and warranties, the lender will consider it an event of default and the lender could demand repayment of the loan. If they were widely drafted, they could trigger material adverse effects that is why the borrower seeks to restrict them.
Default or potential default clauses deals with the case of the borrower not being able to continue his obligations towards the lender or potentially not being able to continue his obligation. Under this clause it will be determined if the lender could stop
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