LexisNexis Practical Guidance®

In the majority of instances, unless the transaction is of a more complex nature (such as a project or acquisition financing), it is quite likely that the term sheet will be settled and attached to a signed engagement or mandate letter between the lender and the borrower before it is provided to the borrower’s lawyer.

However, in some circumstances practitioners are given an opportunity to review a term sheet on behalf of the borrower before it is settled with the lender. This guidance note addresses some of the key issues for consideration, including:

• •purpose of the term sheet and some general observations;
• •general issues to consider when reviewing a term sheet; and
• •acquisition finance and project finance term sheets.

See Reviewing the term sheet when acting for the borrower.

This guidance note explains the purpose of representations and warranties in loan transactions and considers the difference between the purpose of representations and warranties in loan transactions as opposed to other contexts such as business acquisition agreements.

This guidance note also explains key considerations when reviewing representations and warranties, including repetition frequency, qualifications relation to materiality and qualifications relating to knowledge. It also provides guidance on common points for negotiation.

See Representations and warranties when acting for the borrower.

This guidance note provides general observations on covenants in loan transactions. It explains information covenants, including financial reporting, other notification requirements, no default certificates, KYC requirements and financial covenants, and general undertakings such as compliance with laws and negative pledges.

This guidance note also explains equity cures and the treatment of subordinated debt.

See Covenants when acting for the borrower.

The “events of default” section in a loan agreement sets out the most important trigger points in the facility agreement where the consequences of their occurrence can have serious ramifications for the borrower. This guidance note explains the purpose of events of default clauses, and considers cure periods, misrepresentation, insolvency-related events of default, enforcement proceedings, cross-default and change in control.

See Events of Default when acting for the borrower.

This guidance note explains the purpose of boilerplate capital protection provisions. It considers some common provisions, including capital protection issues, taxes, increased costs, illegality and market disruption.

See Boilerplate capital protection provisions when acting for the borrower.

This guidance note considers the borrower’s perspective on matters of assignment and conditions precedent.

The assignment clause in most first draft loan agreements is heavily weighted in favour of the lender and this guidance note explains considerations for the borrower’s lawyer when advising on assignment clauses.

The guidance note also explains the role of the borrower’s lawyer in the provision of the legal related conditions precedent, so that completion can occur quickly and smoothly.

See Assignment and conditions precedent when acting for the borrower.