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Credit Facilities -- Fifteen Issues For the Borrower and its Counsel

Peter O. Hansen, Kelly N. Matthews, Oil and Gas Agreements: Sales and Financings (2006)

Nearly all companies need to borrow money at some point in time, whether to finance an acquisition, for general working capital, or for other purposes. The lender, whether it is a commercial bank, another financial institution, a hedge fund or other type of lender, usually is represented by counsel that spends a significant portion of its time drafting and negotiating loan documents on behalf of lenders. The borrower's counsel, on the other hand, often has limited experience negotiating loan documents. This paper is intended to assist a borrower's counsel in identifying and addressing some of the more important issues for a borrower that arise in a loan transaction.

This paper is not a comprehensive guide to negotiating a loan transaction on behalf of a borrower, and many issues that can impact a borrower over the life of a loan are not discussed. Complete coverage of all of the issues that are important to a borrower would require a treatise. The topics addressed in this paper were selected because they can be of significant concern to borrowers and they frequently arise in loan documents. Every set of loan documents, every borrower, and every lender are different, and in any given loan transaction there will be a number of additional issues that the borrower and its counsel will need to analyze and address.

Nearly every loan document is negotiable to some ex