Fronted Distribution Agreements to smooth syndication process

Fronted Distribution Agreements to smooth syndication process

The recent publication of two versions of Fronted Funding and Distribution Agreements by the Loan Market Association will help ease the administrative burdens on lead arrangers and underwriters, primary syndication lenders and borrowers.

Original news

The Loan Market Association (LMA) has introduced new forms of fronted agreements for leveraged acquisition finance transactions. The new agreements came as a response to participants in the syndicated leveraged loan market calling for a form of fronted underwriting to assist in the smooth running of the syndication process.

What are the new documents?

The LMA has published two new documents:

  • Fronted Funding and Distribution Agreement (FFDA); and
  • Fronted Distribution Agreement (FDA).

These documents will be relevant to those advising mandated arrangers and underwriters and primary syndicated lenders. The two new agreements are aimed at syndication in the leverage finance market.

What do the new documents do?

In a syndication, one or more lead arranging banks may fully underwrite the facilities to make them available to the borrower. This typically involves them fully funding the facilities on completion, on the basis that when primary syndication takes place shortly thereafter they will be distribute part (or all) of those facilities amongst the new lenders who form the primary syndicate.

The agreements regulate the rights and obligations of the arranging and underwriting banks who are engaged in organising and underwriting the initial drawdown of term facilities by the borrower and the distribution of allocations in those facilities to the institutions that will form the primary syndicate of lenders. The documents are primarily aimed at making this process smoother and less risky for

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About the author:

Miranda is a solicitor specialising in leveraged and acquisition finance. She trained at Hogan Lovells International LLP and qualified into the international banking and finance team. During her time at Hogan Lovells she worked on a variety of domestic and cross-border transactions, acting for both borrowers and lenders. She also experienced secondments to Barclays Bank PLC and Kaupthing Bank hf.