In a practice note in the „Parties“ section of the new Syndicated Facilities Agreement, Practical Law`s banking and finance team discusses in detail the different parties to a syndicated credit transaction and the process in which a financial party normally referred to as an „arranger“ is appointed and solicited by the borrower (for a fee, of course) to arrange the syndicated credit facility, including the participation of other enthusiastic lenders to form the consortium. For example, the real-time gross settlement system, managed by the Reserve Bank of Australia and used by all Australian financial institutions to transfer funds between banks, is closed every working day before 5pm. At the request of the borrower, a facility agent cannot transfer money between banks after 5 p.m. In a world where all finances are international, it is almost inevitable that a consortium of lenders will be made up of both domestic and foreign banks. It is also very likely that a foreign-based financial institution will be chosen by the borrower as a facility agent or security agent. Several clauses of the Agreement on Syndicated Practical Law Facilities are intended to remind lenders of these issues, and further clarification of competition laws, as they apply to syndicated lenders, is set out in various comments in this paper. Although biased, we strongly recommend these obligations to banking and financial lawyers and syndicated lenders. If you are not a Subscriber to Practical Law, simply request a trial version to access the full range of banking and financial resources, including syndicated facility agreements on the subject. Most syndicated credit documents, including the agreement on syndicated facilities with a practical right, allow for a variety of communication methods, from paper to telephone to email. The same documents even allow notifications to be sent by fax (younger readers, it`s like a photocopier, except that it sends the document via the phone line. Don`t worry about them – they are almost obsolete). This is the reason why, among other things, even a document as current as the unionized establishment agreement for practical law only allows for an eight-hour period during which notifications can be sent, received and implemented. And at a time when flexible work practices and work-life balance are becoming increasingly valuable and important, this clause in union credit documents can remain for a long time.
The range of communication technologies available to lenders and borrowers allows parties to communicate in real time at any time. When on a Saturday at two o`clock in the morning, a borrower wishes to apply for a loan under a facility agreement, they can do so if the termination clause contained in the document allows for email notification of credit withdrawal notices. So far, few public examples have shown that large banks are merging with non-bank lenders to form a syndicated credit group. However, there are no legal obstacles to this agreement and offer both challenges and opportunities for traditional syndicated lenders, facilities and security trustees. In drafting these new updated documents, the team found that there are some very interesting and useful sections in syndicated facility agreements, too often overlooked by banking and financial lawyers, banks, and other lenders and borrowers….