The following Banking & Finance practice note provides comprehensive and up to date legal information covering:
Interim loan agreements are short form loan agreements which are put in place as a 'bridge' until full finance documentation is agreed.
Interim loan agreements are often used where the sale of a target group is being conducted by way of an auction or where the timetable to completion is otherwise short. Usually this competitive or time-compressed environment means that the time available to put full finance documentation in place is reduced. Also, 'certain funds', while not technically a requirement in private acquisitions, has become a common requirement, and interim loan agreements are viewed as a good way of showing the ready availability of funding (for more information about certain funds, see Utilising, repaying and prepaying the facilities).
Where the sale of a target group is being conducted by way of an auction, potential buyers compete against one another to show the vendor that they are ready to complete the deal quickly. Committed financing by way of an interim loan agreement is viewed as an advantage by both vendors and buyers.
Vendors are happy because it gives them certainty that their buyer or potential buyer is in a position to complete, and buyers gain comfort that they are not going to be put in
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