Facility agent

The facility agent is the institution that the lenders of a syndicated loan, a club deal or a Euro PP loan appoint to administer the financing after signing. The loan template of the Euro PP Charter of October 2019 describes its mission: calculating and managing the financial flows between the borrower and the lenders, receiving and passing on documents and information, negotiating the documentation on the lenders’ behalf after signing. The arranger organises the syndicate and sets the terms of the loan until signing. The agent takes over from that date. In the Charter template, the borrower sends the agent its drawdown requests, its prepayment notices and information on a change of control; the agent passes these on to the lenders. It calculates the replacement rate when Euribor cannot be determined and gives the borrower the effective annual rate letter (taux effectif global). Decisions of the majority lenders, set at 66 2/3% of commitments in this template, go through the agent. The agent acts on behalf of the lenders. For the borrower, it becomes the syndicate’s single point of contact throughout the life of the loan, including for a waiver or amendment request. The negotiation covers the annual agency fee, the notice periods and the arrangements for replacing the agent.

A mid-sized company draws €30m under a €150m syndicated loan. It sends its drawdown request to the agent five business days before the desired date. The agent calls the funds from the eight lenders pro rata to their commitments and pays the €30m to the borrower.

• The annual agency fee and how it is calculated.
• The notice periods for drawdowns and prepayments.
• The conditions for the agent’s resignation and replacement.
• The route for waiver requests and lender votes.