Structuring Commercial Finance Term Sheets, Proposals, and Commitment Letters: Key Terms for Lenders and Borrowers

Avoiding Unintended Consequences, Limiting Drafting Ambiguity

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

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Conducted on Thursday, March 3, 2022

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Course Materials

This CLE course will provide commercial finance counsel with guidance on using and analyzing term sheets, proposals, and commitment letters in commercial finance transactions. The panel will explain the potential risks associated with their usage and provide best practices for minimizing those risks through careful drafting, keeping in mind market realities.

Description

Commercial loan term sheets and proposal and commitment letters can be an essential tool in ensuring that the parties understand and agree to the terms of a proposed financing transaction. They can set the stage for diligence and other efforts to get to closing and provide comfort for lenders in covering expenses and fee payments.

Term sheets and commitment letters can provide borrowers with the certainty of financing when a planned acquisition or investment is dependent on the availability of financing. Still, they can introduce significant risk to lenders if not drafted carefully, including the likelihood that a lender may be required to fund the transaction under unanticipated circumstances.

Listen as our experienced panel of finance practitioners examines term sheets, proposal and commitment letters, the appropriate situations, terms to use and terms to avoid, and potential risks from both a lender and borrower perspective.

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Outline

  1. Impact of current market conditions on loan documentation
  2. Negotiating key terms
    1. Conditions
    2. Loan amount
    3. Interest rates and fees
    4. Required and voluntary prepayments, call protection
    5. Affirmative and negative covenants
    6. Financial covenants
    7. Default provisions

Benefits

The panel will review these and other priority issues:

  • How do these documents differ, when should each be used, and what types of risks are created by their use?
  • What are the critical provisions in commitment letters?
  • How can the borrower and lender each minimize risk through these provisions?

Faculty

Kirsch, Jesse
Jesse T. Kirsch

Of Counsel
Paul Hastings

As a member of the Financing and Restructuring Group, Mr. Kirsch’s practice focuses on the representation of...  |  Read More

Nand, Arleen
Arleen A. Nand

Shareholder
Greenberg Traurig

Ms. Nand represents commercial, cooperative, development and investment banks, as well as hedge funds, sponsors,...  |  Read More

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