Term sheets and facility agreements

Term sheet

A term sheet is used by a lender and the borrower to record the main terms of a proposed lending facility as a precursor to preparation of full documentation.

A term sheet is not usually binding, however if a term sheet is agreed by the lender and the borrower, it gives confidence to the parties to be able to proceed with the preparation of full loan and security documentation.

Facility agreement

This is the agreement between the lender and the borrower, which sets out the terms of the loan in full and constitutes a binding agreement. The lender and the borrower, when negotiating the terms of the facility agreement, will, to a certain extent, have different (and competing) perspectives. The terms of each facility agreement will be tailored to the outcome of the negotiations between the lender and the borrower for a particular transaction.

See Term sheets and facility agreements.