LMA creates PXF agreement
The Loan Market Association (LMA) has launched a recommended single currency term facility agreement for pre-export finance transactions.
The document has a traditional pre-export finance PXF structure, with a term loan facility made available to the seller of specified products to specified buyers under sales contracts, and security taken over those contracts, letters of credit and certain bank accounts into which payments are made or swept.
It contains provisions specific to PXF transactions in relation to sales contracts and certain cover ratios to test performance under those contracts.
The agreement uses the same structure as the LMA's recommended form of facility agreement for leveraged acquisition finance transactions, and was produced with input from bank and law firm representatives. With it, the LMA hopes to improve efficiency in the PXF market by providing a common framework for practitioners.
Clare Dawson, LMA managing director, says: "[This] represents a further move by the LMA into a different area of the syndicated loan market, and demonstrates its desire to extend its suite of documentation to include more specific debt sectors. We hope that it will be a useful starting point for law firms drafting facility agreements for PXF transactions and that it will lead to more efficient and productive negotiation of documentation."
The association has also launched a recommended form of agreement for developing market jurisdictions, which assumes that the transaction is an unsecured single currency term loan to obligor companies incorporated in developing market jurisdictions.
The document contains provisions applicable to developing markets generally, but users must also consider any legal or other issues specific to the country in which their obligor is based, the LMA warns.
Click here to read about the LMA's syndicated loan conference held in London last week.