Buku How to Negotiate Eurocurrency Loan Agreements

• Judul Buku: How To Negotiate Eurocurrency Loan Agreements
• Penulis: Lee C. Buchheit
• Editor: Nick Ferguson
• Penerbit: London: International Financial Law Review, 1995
• Cetakan: First edition published 1995
• Bahasa: Inggris
• ISBN: 1855648296

Buku Sinopsis How to Negotiate Eurocurrency Loan Agreements

For a borrower, reading a Eurocurrency loan agreement is much like bungee jumping; the best bit is at the beginning. Thereafter, the experience becomes progressively more alarming.

Architecture

The-delicious part of a loan agreement for the borrower is right up front, in the first operative paragraph usually bearing the caption Drawdowns or some equally tantalizing word. This section will describe how and when one gets one’s hands on the money. It is for this reason a provision much beloved of borrowers.

What follows in the typical Eurocurrency loan agreement, however, will be less to the borrower’s taste. The next two sections will betray the bankers’ venality. The first will recite how keen the bankers are that the borrower pay interest on the loan every now and again.

The next will hint broadly that the lenders would like to receive the principal of the loan back sometime before the crack of doom, if you please. After all that has happened in the world of international finance over the last 20 years, it may strike the reader as astonishing that such expectations persist among sophisticated lenders but, rest assured, they do.

As the borrower sees things, the indelicacy of subject matter will not stop with the repayment clauses. The rest of the loan agreement will be divided up more or less as follows: There will be a part in which you must tell the banks that you haven’t been naughty (representations and war-ranties).

Then they will ask you to promise that you won’t be naughty (negative covenants) and will be nice (affirmative covenants). Right after this they will warn you about the disagreeable things that can happen to you if you are naughty (events of default; remedies).

Finally, the lenders will lure you into agreeing to the place where they can scold you if they catch you being naughty (submission to jurisdiction; choice of law; waiver of immunities).

Interspersed among the clauses designed to encourage good behaviour on the part of the borrower will be a few that have little if anything to do with the borrower. If it appears to the casual reader that bankers don’t seem to trust their customers to do the right thing in the absence of contractual promises to this effect, they trust their fellow bankers only marginally more.

A syndicated loan agreement (that is, one in which two or more banks make advances pursuant to the same credit instrument) will, for example, contain provisions designed to ensure that each member of the syndicate will receive payments ratably under the agreement.

These so-called sharing clauses amount to a promise by the creditors inter sese that disproportionate payments received by any one lender will be shared by that lender with the others. The borrower may be asked to acknowledge the existence of this arrangement, but it is in the end a covenant running from each lender to the other lenders.

Elsewhere in the agreement, the agent and the managers will go to unseemly lengths to disavow any duties or responsibilities to the members of the syndicate other than those expressly set out in the document, and will declare themselves absolved from all liabilities except for those caused by gross negligence or their willful misconduct.

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