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DF SGS 4 Consolidation
- Module
- Debt finance
Comprehensive exam notes on SGS 4 debt finance based on the learning outcomes and small group session activities at BPP.
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Legal OpinionsGeneral
Letter confirming corporate capacity of borrower and that the finance documents (i.e loan agreement) are
legally valid, binding and enforceable
Reduces
A c t i v i risk
t y 2 of c o non-payment
n t . .. and gives bank level of comfort
Bank’s solicitor’s asked to give opinion -> addressed to bank or agent if syndicated loan
Re matters of law and fact (i.e based on assumptions)
Contain
D e s c r qualifications
i p t i o n o f t h e T r a limiting
n s a c t i o n the
: scope of the legal opinions and assumptions as to certain facts by the
lawyers providing them
£ 4 0 ,0 0 0 ,0 0 0 s e c u r e d f a c ilit y a g r e e m e n t d a t e d [ ]
Required:
b e t w e e n F e e l g o o d (B o d y c a r e ) L im ite d a s t h e b o r r o w e r
o Secured
( t h e “ B lending
o r r o w e r ” ) , F e e lg o o d P lc a s th e g u a r a n to r
o Overseas
( t h e “ G ujurisdictions
a r a n t o r ” ) , P r einvolved
m i e r B a n (banks
k P l c a s weary
A g e n t , about withholding tax etc)
A r r a n g e r a n d S e c u r ity T r u s te e a n d t h e le n d e r s
lis t e d in S c h e d u le 1 t o t h e F a c ilit y A g r e e m e n t
a s O r ig in a l L e n d e r s ( t h e “ F a c ilit y A g r e e m e n t ” )
i. Who are the parties to the transaction?
• Borrower
10 B P P L A W S C H O O L
• Guarantor
• Arranger, Agent and Security Trustee
• Syndicate lenders
ii In relation to which parties will the Lender’s solicitor’s opine?
• Borrower
• GuarantorA c t i v i t y 2 c o n t . ..
iii. In relation to what documents will the Lender’s solicitor’s opine?
Loan
1 . 1 Agreement
E a c h O b lig o r is a c o m p a n y d u ly in c o r p o r a t e d
in E n g la n d a n d h a s t h e c a p a c it y a n d p o w e r t o e n t e r
Debenture
Share h e F in a n c e D o c u m e n t s a n d t o e x e r c is e it s r ig h t s
i n t o tcharge
a n d p e r f o r m it s o b lig a t io n s u n d e r t h e F in a n c e D o c u m e n ts .
iv. Structure of Legal opinion
Cross refers to loan agreement (i.e Finance Document)
Schedule 1: Documents and Enquiries
o Limits documents on which the solicitors are basing their opinion (narrows liability)
Schedule 2: Assumption
11 B P P L A W S C H O O L
o factual matters that are assumed (i.e if there’s a signature, it’s assumed that it belongs to the relevant person)
Schedule 3: Qualifications
o Qualify the solicitor’s opinion -> limit the scope of liability (re insolvency)
L e g a l o p in io n – A d d itio n a l e x a m p le What legal opinions will the Syndicate require for
this transaction?
Loan
On which parties and documents will the lawyers
Y e llo w L im it e d S y n d ic a t e
S e c u r ity
for the Syndicate be required to opine on?
S e c u r ity
and
g u a ra n te e
G rü n B la n c
R e d L td . G m bH S .A .
12
B P P L A W S C H O O L
4
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