The following Banking & Finance practice note provides comprehensive and up to date legal information covering:
During the term of a facility, the borrower's financial position is likely to fluctuate. Sometimes, its circumstances change to such an extent that it wants the terms of the facility documentation to be formally altered to reflect this change. For example, a borrower might ask its lenders to relax the financial covenants binding on it if its financial condition has significantly improved and looks set to be sustained. Conversely, if the borrower isn't performing well financially, it might ask its lenders to reschedule the debt to make the repayment dates achievable. Those types of amendments are permanent.
One-off waivers and consents arise where the borrower's circumstances have changed in a more temporary way. For example, it might have had a bad quarter, causing it to temporarily breach a financial covenant. In these circumstances, the borrower will not need a permanent amendment to the facility agreement but rather just a short-term waiver from the lenders to avoid it being in default. Sometimes, the borrower does not need a waiver from the lenders but, rather, consent from them for something that it wishes to do which is prohibited by a negative undertaking in the facility agreement.
This Practice Note discusses the key issues involved in permanently amending an existing facility agreement. It does not deal with one-off waivers and consents. For information on waivers and consents, see Practice
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On 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 rules. Alongside the Rulebook, supervisory statements and statements
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