Information memorandum

An information memorandum (mémorandum d’information) is the presentation document given to potential lenders so that they can assess a financing request. In a syndicated loan or an acquisition financing, the arrangers prepare it from the due diligence reports and the reference financial model (Base Case Model), then circulate it during syndication. It describes the business, the market, the management team, the historical accounts, the business plan, the structure of the transaction and the terms of the financing requested. The borrower remains responsible for its content: the Loan Market Association model agreement contains a representation that the information memorandum is accurate, complete and up to date, made at closing, on the syndication date and on the date the parent company approves it. An inaccuracy becomes an event of default for misrepresentation. For you, the negotiation concerns the scope of this representation: limit the accuracy warranty to factual information, state that the projections were prepared in good faith on reasonable assumptions, and date the information so that it is not deemed repeated later. Each lender signs a non-disclosure agreement before the document circulates to it.

A mid-sized company with €220m of revenue is seeking €70m of unitranche debt. Its 45-page memorandum presents five years of accounts, a five-year business plan with EBITDA rising from €26m to €34m, the use of funds and the proposed security structure. Six debt funds receive it after signing a non-disclosure agreement.

• Consistency between the memorandum, the financial model and the due diligence reports.
• The scope of the accuracy representation in the facilities agreement.
• The distinction between factual information and projections.
• The non-disclosure agreement signed before any circulation.