Line Of Credit Agreement Template: Fill & Download for Free

Below are a few politically correct anecdotes from my early years in leveraged finance.I will leave the others for my memoirs :-)1- People don't read the documentsAs a young apprentice in leverage finance, fresh out of business school, I took it upon myself to try to understand every clause of the typical 300-page credit agreement we negotiated line by line with PE sponsors for several weeks.So I asked a lawyer from a reputable firm specialized in advising banks and sponsors on these documents to walk me through each clause. Most of the times, the explanation was: "well, to be honest. I don't know exactly... but it's in the loan market association template!".I was initially a bit disappointed, but I thought maybe I was being too harsh, and maybe these clauses were very "technical" in nature so it was only normal that a lawyer would not necessarily understand them in detail.So I asked the portfolio company's treasurer, who was meant to live with the credit agreement once the deal was closed and abide by all these rules. As you may have guessed by now, the answer was "well to be honest I don't understand most of theses clauses either".Again a bit of disappointment, but I thought maybe the wording was only useful in case of troubled times, and I went back to work without thinking too much about it.A few years later, in the midst of a complex restructuring following the global financial crisis, and sitting on the other side of the table as a PE sponsor. I was surprised to hear renowned restructuring lawyers say that many clauses in these 300 page documents either did not work in practice or were illegal under French law. They even had a funny knickname for their banking law dealmaking colleagues: "serial closers" :-)Conclusion:maybe it's not that important to read the 300 pages after all :-)the 4-page documents and "handshake deals" that people used back in the days seemed to work out just fine :-)oh and yes, I use another law firm now2- People don't read the documents (cont'd)Did you know that when lenders charge a 10% interest rate, they don't really charge a 10% interest rate?See, in the banking world, a year has 360 days and not 365 days like in the real world.So a 10% rate is really a 10%x365/360=10.1388% rate.Who cares right?Well assume you have a $100,000,000 subordinated loan with a 10% PIK interest rate and a 10 year maturity:if you thought the 10% rate was really 10%, then the loan's value in your model would be roughly $259,400,000 at maturitythe real amount would in fact be c$262,700,000, so a c$3,300,000 difference! That's a lot of money by my standards! (*)Conclusion: double check your model and read the fine print ! :-)(*) Edit: thanks to Jordan for pointing out a horrendous calculation mistake; I should have said triple check + pledge never to go out without my HP 12c anymore :-)3- "Don't tell me what to do with my f***ing equity check!"This brings to mind an interesting anecdote.When I was still in leveraged finance, I was once called by one of my M&A colleagues to help his clients (a European corporate and two Canadian pension funds) negotiate a credit agreement with a leveraged finance bank (one of our largest competitors at the time) for an infrastructure deal.One of the pension fund guys, in typical Canadian fashion :-), was wearing a lumberjack shirt. The bankers were all wearing suits and ties. This is going to be fun I thought!After a few days and nights of discussions, the poor lev fin banker finally pulled out his 300-page credit agreement and gently started explaining what actions would and would not be allowed.You could see the face of one of the pension fund guys (the one with the lumberjack shirt) progressively turning red as he held his breath, until he could no longer take it, got up, banged on the table, and yelled "you're not gonna tell me what to do with my f***ing equity check!".I thought the lev fin banker was going to have a heart attack!He also pointed out (quite rightly as it turned out) that as a AAA rated entity he was the one taking counterparty risk with the lev fin bank.Suffice it to say that the consortium lost the deal in the end (I suspect in part to such cultural shocks and outbursts).But it was an interesting experience :-)

Why is China suddenly getting aggressive against India?(Photo Credit: the Global Magazine of News and Ideas )China, by most public accounts, has been quietly probing, pushing, and needling India on the long LAC (Line of Actual Control) between the two nations for a considerable length of time, well into the decades, in an on and off fashion. During this period, various government reports and leaks have indicated that India has lost an area roughly equal to the size of Switzerland to the careful salami-slicing tactics of China.Most of the areas lost to China was either uninhabited or sparsely populated, and all of the territory in question was in disputed boundary areas. Nevertheless a clear picture emerged whereby India was almost always the party reacting to China’s moves and seeking to defuse the situation through military talks and diplomacy. This normally paused things for a while before China resumed its advance, either in the same general area or along another disputed point along the LAC.The reason that things suddenly seem more ‘aggressive’ by China is that India is no longer following the same policy of allowing China to occupy disputed areas while seeking to diffuse tense situations with China via diplomacy and negotiating for a Chinese withdrawal back to status quo ante areas after talks.Since 2014, when the BJP swept into power the Modi government has pursued a far more assertive, yet non-belligerent policy with China.Almost immediately after the inauguration of the Modi led government China moved on the border, and they did it while Xi was meeting with Modi in India. This was in 2014 and India issued a strong demand to China to stop the border provocations.The Chinese noticed the change in tone and changed tactics to focus on economic pressure. At the 2014 meeting China was pitching a $35 billion USD investment into India. But while economic pressure tactics had worked with most previous Indian administrations it did not work this time. China ended up investing far less into India as a consequence but India was firm in its demand that China engage in good-faith talks leading to actionable and beneficial results for both parties—the very elusive win-win outcome.China backed off for a while but soon enough confrontations occurred on India’s borders and on Indian Ocean neighbors with close ties to India. So flashpoints occurred in the 2017 Doklam standoff, the 2018 naval maneuvering off the Maldives, and the 2020 confrontations along multiple points of the LAC, including the deadly clash in the Galwan Valley area.In all these confrontations India surprised China. India reacted firmly, matched the force buildups by China, and fought back when required, as occurred in the Ladakh area. China noticed that their usual economic inducements, intimidation tactics, and psyop blitz simply had no effect on India. The Chinese found themselves in the uncomfortable position of having to constantly up the ante to appear to have the upper hand and to portray to the world and their own citizens that China was setting the pace and in control.But these tactics proved dangerous as upping the ante could only be done so many times before there was nothing left to ‘up’ with, and they ran the risk of a serious escalation with the 4th or 5th most powerful nation on the planet. Despite China’s rhetoric they appear to be far from certain that they could defeat India in a conventional conflict, and such a conflict ran the risk of going nuclear. India, due to its more assertive, confident, realpolitik approach had become unpredictable to Chinese strategists, and this unsettled them.(Photo Credit: Dreamstime.com)So the ‘sudden’ aggressiveness of China has more to do with China being much less confident in dealing with India and resorting to much more visible coercive tactics which in turn generate greater media scrutiny and citizen reaction. To citizens tuning in to the Sino-Indian confrontations for the first time it may seem that China is acting in a sudden and aggressive manner, but in actuality things were in a low boil for quite a while, with the clash between the two giants becoming more visible due to India’s much stronger pushback against unilateral changes to the LAC.China and India are both rising megastates, and the vexing problems of the border, with boundaries based on shifting landmarks and major strategic prizes at stake are a bit of a Gordian knot for China and India to solve.In early September both nations met at the ministerial level in Russia and have hammered out an agreement to de-escalate, a good sign that both China and India are looking for an off ramp in their escalating standoff. However force levels are now very high in the region and trust is in short supply between the two powers, particularly after the Galwan Valley clash.(Photo Credit: English News Headlines: Latest News Today, Breaking News from India & World Modi and Xi at an earlier summit)It is likely that flare-ups will continue to occur along the border, as well as in the economic and political realms. If trust is broken again, (and again) then things between the world’s largest demographic powers, holding almost 40 percent of humanity, can get very dicey. However if the new agreement holds then China and India will have a very useful template to manage future border showdowns with much less uncertainty and hopefully zero bloodshed.

Hi Peter Coultas, and thanks for the A2A!(Source: cbinsights)What industries will Blockchain disrupt the most?Any industry that spends a lot of money tracking the movement of documents, people, and things. Finance, of course, but also health care, publishing, energy, shipping, law enforcement, law, education...I write about this in my book, Consensusland.We now have the capacity to send things to anybody, anywhere, anytime with certainty our recipients will get what we send them—and we do not need a broker, clearinghouse, escrow, or third-party to ensure this happens. We have, instead, an immutable ledger and smart contracts.The implications are staggering.IMO the industries disrupted the most will be finance, law, and energy.FinanceOthers have commented on the fundamental structural changes you’ll see in the coming decades. Few talk about an incredibly valuable use of blockchain: creating secondary markets (and the massive economic benefits of second-hand goods.)Blockchain enables secondary markets for every asset using a security token, a type of cryptocurrency that represents a real-world financial asset. The blockchain records all pertinent details of that asset and the cryptocurrency allows you to give that asset to somebody else with all associated terms, conditions, and benefits.For example, let’s say you want to buy a share in a business. You could use a clearinghouse or brokerage, but choose instead to use a security token to save money. All dividends, interest, equity, voting rights, and other benefits get baked into the token’s programming. When a company wants to increase its dividend, it issues a new smart contract that overwrites the old contract. Same for any other change in the terms or any restrictions and qualifiers demanded by regulators and issuers.You can use the same approach to manage stock splits, dilutions, quarterly payments, and other types of financial events. And, since the smart contract stays with the token, not the token holder, anybody can create secondary markets and sub-markets for privately-held securities—enabling more people to own financial assets with less expense, cost, complexity, and without minimum investment or banking requirements.This is not hypothetical—DX.Exchange, an Estonian exchange, has already started listing security tokens and NASDAQ, its parent company, has already announced its intention to lead the field in security tokens.Polymath, Harbor, Stokr and many other companies have already created platforms for security tokens. Crowdfunding platforms Indiegogo and Seedinvest have announced their intent to enter this space. Goldman Sachs subsidiary Circle floated the idea of entering this space, too.What will be the next thing blockchain will be used for?Security tokens are just limited to financial assets. Can you imagine how the world will change when a first-time homebuyer sells microshares of his future house to collect cash for a down-payment? When you can sell equity in your house on an open market for free rather than paying a bank to refinance or extend a line of credit?LawSmart contract technology is in its infancy and there are many risks, concerns, and questions to address. I’ll spare you the details in this answer, though it’s a really fascinating aspect of crypto that nobody talks about. (e.g., how does law change when nobody can breach a contract?)Legal profession already uses templates for the vast majority of contracts and filings. With smart contracts, these templates can get embedded on the blockchain and enforced by computer code. What does this mean for courts? Lawyers? Legal fees? Under what conditions can one party renegotiate a bad agreement? What new areas of law do we need to explore?EnergyThe world wastes hundreds of billions of dollars worth of energy. Some places produce more than they need while other places face chronic shortages.Creating a secondary market for unused or surplus energy will unlock untold economic value, but that’s a massively complicated, costly endeavor using conventional means. Cryptocurrency makes it much easier by cutting out the layers of suppliers, distributors, and regulators.(Not easy, but easier.)One Thing You’re Getting Wrong About CryptocurrencyBlockchain changes everythingI’m really excited to see how things turn out. In Consensusland, I present my vision for how the world will change once people grasp the potential of blockchain and the consequences of programmable money. I encourage you to read it, and if you do, please let me know what you think.(Honorable mention to education—20 Ways Blockchain Will Transform (OK, May Improve) Education)***If you liked this answer, please upvote and share it!***—Mark Helfman is a cryptocurrency commentator and author of Readers’ Favorite award-winning 5-star book Consensusland: A Cryptocurrency Utopia.