Since the publication of the last edition of the ACT Borrower’s Guide to LMA Loan Documentation for Investment Grade Borrowers in April 2013 (the “ACT Guide”), the LMA has revised its recommended forms of facility agreement for investment grade borrowers (the “Investment Grade Agreements”) four times, on each occasion following discussions with the ACT.
The key changes include:
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Amendments to the definitions of “LIBOR”, “Euribor” and related provisions to address the implementation of reforms to the benchmark process and administration and the incorporation of an optional “zero floor”
- An optional adjustment to the Borrower’s right to prepay a Defaulting Lender.
- The incorporation into the tax clauses of provisions permitting affected parties to withhold where applicable pursuant to the US legislation known as the Foreign Account Tax Compliance Act (“FATCA”) and imposing information-sharing obligations on all parties for the purpose of complying with FATCA and similar legislation.
- Updates to the footnotes to the increased costs clause which highlight that the parties may wish to amend the clause expressly to reflect their commercial agreement with regard to the costs associated with Basel III.
- A significant re-write of the agency provisions, offering clearer and more comprehensive protection against the risk of the Agent incurring liabilities in the discharge of its function.
- The addition of a number of matters to the list of amendments and waivers requiring unanimous Lender consent.
- The Mandatory Costs provisions being marked as optional provisions.
- A number of smaller amendments to reflect changes that Borrowers often seek to make to the template in negotiations.
- The incorporation into the suite of a new multicurrency term and revolving facilities agreement incorporating a letter of credit facility, bringing the total number of different iterations of the Investment Grade Agreement to 11.
