Main Street Lending Program: Documentation, Federal Reserve Participation, Concerns With Existing Financing

Recording of a 90-minute premium CLE webinar with Q&A


Conducted on Wednesday, September 30, 2020

Recorded event now available

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Program Materials

This CLE webinar will discuss latest guidance on how each of the Main Street Lending Programs should be documented, the mechanics of the Fed's SPV participation in each loan, and concerns that must to be addressed with regard to existing financing. The panel will also discuss the interplay of the loan documents with the participation documents after the loan is closed.

Description

On July 6, 2020, the Federal Reserve Bank of Boston announced it is now fully operational and ready to purchase participations in eligible loans submitted under any of the Main Street Loan programs. The Fed previously released term sheets and various other program documents for the "New," "Priority," and "Expanded" Main Street Loan facilities along with FAQs, which provide a roadmap for documenting and closing Main Street loans.

The Fed has provided model language for certain essential provisions in loan documents (as well as a list of required financial information borrowers are required to deliver on an ongoing basis). Also, borrowers and lenders must make various certifications in connection with each loan.

Counsel should understand the relationship between the borrower, the lender, and the Fed-owned SPV, which will be purchasing 95 percent participations in Main Street loans. The participation agreement, the assignment-in-blank, and the co-lender agreement must be read together with the loan documents, along with the servicing agreement, which sets forth the lender's and the SPV's rights in connection with the administration of the loan.

Any borrower seeking to take advantage of the facilities under the Program will need to assess how a Main Street loan will integrate with existing debt structures. Contractual issues related to everything from restrictions on additional debt and liens to prohibitions on distributions should be analyzed carefully.

Listen as our authoritative panel analyzes the essential documentation and features of the Main Street Lending Program. The panel will also discuss the certifications required from the borrower, the terms of the participation arrangement between the lender and SPV, and concerns relating to existing financing.

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Outline

  1. Main Street Lending Program
    1. Term sheets for all the three credit facilities
    2. Eligible borrowers, eligible lenders
    3. Federal Reserve participation through newly created SPV
  2. Documenting the loan
    1. Integrating fed model provisions into the lender's loan documents
    2. Borrower certifications and financials
    3. Lender certifications
  3. The participation process: after or contemporaneously with closing
  4. Participation agreement, assignment-in-blank, and co-lender agreement
  5. Servicing agreement: administration of the loan, borrower reporting obligations
  6. Rights of Federal Reserve vs. lender in an event of default: elevating the SPV's interest to that of lender

Benefits

The panel will review these and other key issues:

  • In what respects do the recently released term sheets revise the initial parameters of the Main Street Lending facilities?
  • Can the model loan provisions prescribed by the Fed be revised by lenders in documenting the loan?
  • What are the key terms of the SPV participation agreement, assignment-in-blank, and co-lender agreement?
  • How might those agreements affect the administration of the loan after closing and enforcement in the event of default?

Faculty

Chernick, Michael
Michael Chernick

Partner
Shearman & Sterling

Mr. Chernick has over 25 years of experience in the U.S. leveraged finance market, representing leading investment and...  |  Read More

Kulawik, Tomasz
Tomasz Kulawik

Partner
Shearman & Sterling

Mr. Kulawik is a partner in the Finance practice in New York and Washington, D.C. and focuses on leveraged finance,...  |  Read More

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