Drafting and negotiating mandate letters in loan transactions
Drafting and negotiating mandate letters in loan transactions

The following Banking & Finance practice note provides comprehensive and up to date legal information covering:

  • Drafting and negotiating mandate letters in loan transactions
  • Parties
  • Types of mandate letters
  • Drafting the mandate letter
  • Finding a suitable precedent
  • Negotiating the terms
  • The MLAs' perspective
  • The borrower's perspective

This Practice Note is part of the Lexis®PSL Banking & Finance loan transaction toolkit. It includes links to precedents and drafting and negotiating points and is intended as an introductory guide to those new to banking law.

Mandate letters are used in many types of syndicated transactions to set out the terms on which the company appoints banks to the various roles in a syndicated facility. The roles will include the mandated lead arrangers (appointed to arrange the facilities) (MLAs), the bookrunners (appointed to arrange syndication) and the underwriters (appointed to underwrite the facilities—ie commit to lending the full amount even if the facilities can’t be successfully syndicated). For detailed information on mandate letters, see Practice Note: Mandate letters.

Parties

The parties to the mandate letter will include:

  1. each of the MLAs

  2. the underwriters (where the facilities are being underwritten)

  3. the bookrunners, and

  4. the borrower

Types of mandate letters

There are two types of mandate letters:

  1. underwritten—where the combined commitments of the underwriters are sufficient to fund the whole amount of the facility and the underwriters agree to fund their respective proportions of the facility even if they do not find any other participants, and

  2. best efforts—where the MLAs agree to use their best efforts to achieve a successful syndication. If the MLA

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