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There may be other factors of influence. For example, it may be necessary to amend and adapt the old facilities agreements to make the conditions compatible with the current policy requirements of donors or with existing legislation. In any case, it is important to review the most pragmatic and cost-effective approach. Many of these agreements were prepared by external consultants using the Loan Market Association or their own models. In these circumstances, it is important that all amendments are dealt with in the simplest and least costly way possible by external consultants. Most of the changes can be made by a simple letter of amendment amending the relevant provision of the facility agreement. This must be signed by the lender and the borrower for the change to be valid. However, the amendments may take effect as a unilateral waiver of the lender, even if the borrower cannot sign. Most of the facilities agreements will include an amendment and exemption clause that will define certain procedural requirements.

In the case of union entities, this clause generally distinguishes whether an issue requires the agreement of majority lenders or the unanimous agreement of all lenders (usually reserved for changes to certain important provisions such as margin). There are a number of factors to consider. For example, changes or the definition of „financial documents“ in the existing facility agreement, which contains future documents, are important. The fundamental principle must be to check whether security is „all funds“ or „specific funds“. This practical note addresses the main issues related to the permanent modification of an existing facility agreement. These are not declarations of waiver and single consents. You will find information on waiver declarations and consents in practice where the borrower`s circumstances have changed more temporarily (for example. B in the event of short-term trade difficulties), it may be more appropriate to temporarily waive the corresponding provision for an agreed period or suspend it. This would be documented by a letter of waiver or a letter of consent that would avoid any lasting changes to the facility agreement. It is helpful for a borrower to be able to contact the lender or facility agent as soon as possible to avoid delays. A lender may be required to obtain credit authorization for the proposed changes, or a facility representative may need some time to approach and contact the consortium lenders regarding the amendments.

It is always worth thinking about the impact these factors could have on timing. For bilateral facilities, the modifier agreement is concluded by the borrower and the lender. With respect to union facilities, the Facility Agent, as a representative of the other financing parties, will normally enter into a modifiing agreement with the borrower. Particular caution should be exercised when checking guarantees or reviewing the safety of third parties; legal principles and jurisprudence in this area are complex. Do the proposed changes affect the position of the surety or a third-party provider in any way (for example. B Life Extension)? To what extent are the proposed amendments substantial? It may be advisable to obtain the explicit approval of said guarantors and security providers for the changes as well as confirmation that existing guarantees and guarantees are not affected. In some cases, it is likely that a funder will need new security or warranty guarantees (especially if the changes are significant). The assessment should be carried out on a case-by-case basis in order to prevent the guarantor or security service provider from being accidentally breached of its obligations.

For example, it may be necessary to review an existing intercreator agreement to ensure that it will allow you to defer capital repayments as part of your facility (which, commercially, may result in a longer freeze on funding for the p