The following Banking & Finance practice note provides comprehensive and up to date legal information covering:
Most facility agreements require the borrower(s) to prepay all or part of the facility on the occurrence of certain events, known as mandatory prepayment events. For a general discussion of common mandatory prepayment events, see Practice Note: Repayment, prepayment and cancellation.
Leveraged facilities agreement have traditionally contained a more extensive list of mandatory prepayment events than an investment grade loan agreement, including:
illegality, ie it becomes illegal for a lender to continue to fund its participation, triggering mandatory prepayment of that lender's participation
exit, ie the sponsor(s) no longer controlling the business, triggering mandatory prepayment of all the facilities (see Acquisition finance—mandatory and voluntary prepayment clausesbelow)
receipt by the group of disposal proceeds, proceeds of insurance claims and proceeds of claims under acquisition documents (proceeds), obliging the group to apply the proceeds towards prepayment of the facilities (subject to exceptions) (see Proceeds below), and
excess cashflow in the group as evidenced by the annual financial statements, obliging the group to apply a percentage of excess cashflow towards prepayment of the facilities (see Excess cashflow below)
It is now common for these traditional mandatory prepayment events to be watered down or, in some cases dropped altogether, especially on transactions with a strong sponsor.
This Practice Note discusses each of these mandatory prepayment events (except for illegality which is covered in Practice Note: Repayment,
Free trials are only available to individuals based in the UK
Complete all the fields above to proceed to the next step.
**Trials are provided to all LexisPSL and LexisLibrary content, excluding Practice Compliance, Practice Management and Risk and Compliance, subscription packages are tailored to your specific needs. To discuss trialling these LexisPSL services please email customer service via our online form. Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason. Trial includes one question to LexisAsk during the length of the trial.
To view the latest version of this document and thousands of others like it, sign-in to LexisPSL or register for a free trial.
Existing user? Sign-in
Take a free trial
Take a free trial
Coronavirus (COVID-19): This Practice Note contains guidance on subjects potentially impacted by the government’s response to the COVID-19 outbreak. For updates on key developments and related practical guidance on the implications for lawyers, see Practice Note: Coronavirus (COVID-19)—implications
PRA Rulebook—introduction for the insurance and reinsurance sectorOn 29 August 2015, the Prudential Regulation Authority (PRA) published the PRA Rulebook (Rulebook). The transition from the Handbook to the Rulebook was intended to benefit PRA-authorised firms, to access clearer and more concise
Arms length management organisations (ALMOs)An arms length management organisation (ALMO) is a not-for-profit company that provides housing services on behalf of a local housing authority (LHA). Usually an ALMO is set up by the LHA to manage and improve all or part of its housing stock with the LHA
AffrayAffray is an offence created by the Public Order Act 1986 (POA 1986). It can be tried in either the magistrates’ court or the Crown Court. The magistrates’ court may decline jurisdiction where for example in cases involving a weapon/throwing objects, or conduct that causes serious
0330 161 1234