The existence of a union does not affect certain provisions of an ease agreement. For example, there will also be a definition of “majority lenders” that is required for approval for certain measures. It is normal for this definition to amount to two-thirds of syndicated banks based on the amount of their interest in the loan. The borrower should ensure that all unionized banks are “qualifying banks” for the above reasons, and once again, an appropriate guarantee may be appropriate. Borrowers: The definition of the borrower includes all group companies that require access to the loan, including revolving credits (flexible credits as opposed to a fixed amount repaid in increments) or the working capital component. This should also include all target companies acquired with the funds made available. Subsidiaries that need a provision may need to join the group of borrowers. If there is a reason why the affected companies cannot be parties to the agreement when they are executed – for example. B in the event of an acquisition by limited companies – prior approval from the bank would be required for them to be included in the agreement at a later date.

If there are foreign companies in the group, it is worth asking whether they will have access to credit facilities or how. The facility agreement may also designate an individual borrower and allow that borrower to continue lending to other members of his or her group of companies. No lender will allow its borrower to merge or be consolidated, so the borrower`s only objective is to limit the scope of the clause by excluding (a) mergers of subsidiaries with the borrower; b) mergers of subsidiaries between them or (c) mergers in which the borrower is the surviving company. Exceptions (a) and (c) may be difficult to obtain because, while they generally address the lender`s concerns about consistent management and control, they expose the lender to the risk that the surviving entity may have less net assets than the existing borrower (if the acquired business has a weak balance sheet). An acceptable approach for some lenders is to allow mergers or consolidations where the borrower is the surviving entity and its net assets do not decline as a result of the merger or consolidation.