Subscription Line Facility Agreement

Oct 10th, 2021 | By | Category: Uncategorized

Not surprisingly, lenders that offer underwriting facilities typically only provide basic loans for commitments not made by solvent investors who meet certain requirements, i.e. “investors included”. Investors who have a public rating of BBB+/Baa1 or higher are usually included. Advances for rated included investors may be higher for investors with higher credit ratings and are typically between 80% and 100% of the nominal amount of the unsused commitment. Unrated investors may also qualify as landlocked investors if they provide sufficient information to enable the lender to determine that they meet certain credit criteria that not all investors are willing to meet. As a general rule, unrated investors are only included if lenders agree, and the advance on commitments of unrated investors is usually subject to the agreement of the lender. Whether the lender`s standard of assessment for approval and anticipated interest on unrated excluded investors is “exclusive discretionary”, “appropriate”, “faithful faith” or otherwise, is subject to negotiations, the outcome of which can make a significant difference when it comes to involving additional investors. The lender`s security interest for most of these collateral can be easily furthered by filing a UCC financing statement. The refinement of the interest of the guarantee on the bank account on which the investors have agreed on their capital deposits is achieved by giving the lender “control” under a tripartite agreement between the lender, the custodian bank and the fund. This element is relatively simple, although the financial institution that would hold the account may require problematic conditions that a lender would oppose the underwriting facilities, including the lender`s claims for compensation and the deposit bank`s ability to assert claims on fees, expenses and indemnities against the assets deposited in the account. These problems need to be addressed in a timely manner in order to avoid last-minute delays. The purpose of underwriting facilities is generally to provide liquidity to the Fund more quickly than to require capital deposits.

Under a credit facility, borrowed credits can normally be made available within a day, while in the case of a typical sponsorship agreement, capital calls can take 10 business days or more. Investors` representations in favour of lenders, even if only included in the limited partnership`s documentation, give lenders appropriate comfort and facilitate access to the credit base. Lenders will also want investors to be required to provide regular credit information, as well as an acknowledgement of their “absolute and unconditional” obligation to finance their remaining contributions (including contributions necessary for financing due to the absence of another investor and contributions necessary to resolve outstanding debts after the end of the Fund`s investment period).

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