The following Banking & Finance guidance note provides comprehensive and up to date legal information covering:
This Practice Note considers:
the nature of term sheets
the circumstances in which term sheets are used
the legal status of term sheets
key issues in negotiating term sheets for both borrowers and lenders, and
key provisions of term sheets, including those in the Loan Market Association (LMA) recommended form of term sheet
Term sheets are used in both bilateral and syndicated transactions.
In this Practice Note, where the term lender is used, it refers to all the lenders in a syndicated transaction. There may also be multiple borrowers in some transactions. Where the term borrower is used, it refers to all the borrowers if there is more than one.
At the beginning of a transaction the lender(s) and the borrower will agree the structure of the deal and the main terms of the facility. The lender(s) and borrower will usually record the key structural issues and main terms of the facility in a term sheet.
In structuring a deal, borrowers and lenders look at the following issues:
is any corporate structuring required (eg will the loan be made to a special purpose vehicle?)
will there be any guarantees?
will there be any security (and if so, what will it be)?
is the debt to be 'senior only', or will there be multiple layers of debt
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