A Note On The New Baltic Bank

1889 Words Jan 21st, 2015 8 Pages
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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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 facilitating the loan, borrowers usually negotiate this clause to not be subjected to “hair triggers” which could cause the borrower to become unable get access to their baking facilities.
As for the interest on the loan, parties in syndicated loan usually fix the interest rate to either LIBOR or EURIBOR or the parties could agree to a fixed interest rate that they both agree upon.
Undertaking Clause is either the duty to supplying the lender with financial information, or the borrower not being able to engage in various activities without the lenders consent. This clause could limit the

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