LMA

The Loan Market Association has more than 900 members across 68 jurisdictions: institutional investors, private and public issuers, banks, non-bank lenders, technology platforms and market infrastructure providers. Its mission concerns the functioning of the primary and secondary syndicated loan markets in the EMEA region. It works on documentation, market practice, loan operations, sustainable finance, education and regulation. For a borrower, its most visible contribution is documentation. The association publishes recommended forms of facility agreement that its members use as the starting point for negotiations. It revises these forms as the market evolves. The range covers investment grade facilities, leveraged financings, real estate, private placements, commodity finance and export credit. It offers French law investment grade agreements, updated in September 2016 to reflect the reform of French contract law. The Corporate Lending form of agreement combines investment grade features with features specific to leveraged financings. Starting from an LMA form allows the borrower to focus the negotiation on departures from the standard: the definition of EBITDA, permitted debt baskets, the change of control clause and the rules on transfers of the debt.

A distribution company with €40m of EBITDA is negotiating a €160m unitranche loan with two debt funds. The draft agreement follows the LMA form for leveraged financings. The company’s lawyers list the clauses amended from the form and focus the discussion on the definition of EBITDA and on the transfer clause.

• The LMA form used as the basis of the agreement and the governing law
• The departures negotiated from the form
• The clause on transfers of the debt and the borrower consent it requires
• The definition of EBITDA and the permitted debt baskets