The following Banking & Finance practice note provides comprehensive and up to date legal information covering:
In financing transactions, conditions precedent are the conditions that need to be fulfilled for funding to occur.
This Practice Note explains:
the nature of conditions precedent
the different types of conditions precedent (ie documentary or factual)
what needs to be taken into account when determining whether the conditions precedent have been satisfied, and
what happens if the conditions precedent are not satisfied
This Practice Note looks at the usual conditions precedent in a finance transaction at the time of:
first drawdown, and
future drawdowns throughout the life of the facility
Where appropriate, this Practice Note highlights relevant provisions in Lexis®PSL precedent Facility agreement (term loan): single company borrower—bilateral—with or without security or a guarantee and the Loan Market Association (LMA) investment grade multicurrency term facility agreement (the LMA facility agreement) (available to LMA members on the LMA website).
The LMA has a series of helpful user guides in the Documents & Guidelines section of its website which provide guidance on its documentation. Additionally, the Association of Corporate Treasurers (ACT) ACT Borrower’s Guide to the LMA’s Investment Grade Agreements contains useful guidance on the conditions precedent provisions in LMA investment grade documentation.
For information on preparing or reviewing conditions precedent, see Practice Note: Preparing or reviewing the conditions precedent in loan transactions (part of the Lexis®PSL loan transaction toolkit).
The provisions of a typical facility agreement envisage that
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