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Mezzanine Loan Agreement for Australia

Mezzanine Loan Agreement Template for Australia

An Australian law-governed Mezzanine Loan Agreement is a sophisticated financing document that establishes the terms and conditions for subordinated debt financing, positioned between senior debt and equity in the capital structure. The agreement incorporates provisions specific to Australian corporate and securities law, including PPSA requirements and ASX considerations where relevant. It details the loan facility, interest structures (including potential PIK interest), security arrangements, subordination mechanics, conversion rights (if applicable), and enforcement provisions, while ensuring compliance with Australian regulatory requirements and market practices.

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What is a Mezzanine Loan Agreement?

The Mezzanine Loan Agreement is utilized in Australian financing transactions where there is a need for additional debt funding beyond senior debt facilities, but before equity contributions. This document is essential for transactions requiring complex financing structures, typically in development projects, acquisitions, or business expansion scenarios. The agreement must comply with Australian corporate law, including the Corporations Act 2001 and PPSA requirements, while addressing the unique characteristics of mezzanine financing such as higher interest rates, potential equity-like features, and subordination to senior debt. The document includes comprehensive provisions for security arrangements, intercreditor relationships, financial covenants, and potential conversion rights, making it suitable for sophisticated corporate financing transactions in the Australian market.

What sections should be included in a Mezzanine Loan Agreement?

1. Parties: Identifies the lender, borrower, and any guarantors or security providers

2. Background: Sets out the context of the mezzanine financing and its relationship to senior debt

3. Definitions and Interpretation: Defines key terms and establishes interpretation principles

4. The Facility: Details the amount, purpose, and nature of the mezzanine facility

5. Conditions Precedent: Lists conditions that must be satisfied before drawdown

6. Drawdown: Specifies drawdown mechanics, notice requirements, and availability periods

7. Interest and Fees: Details interest rates, payment dates, PIK interest provisions, and all applicable fees

8. Repayment and Prepayment: Sets out repayment terms, mandatory and voluntary prepayment provisions

9. Security: Describes security arrangements and their priority

10. Subordination: Establishes the subordinated nature of the debt and relationship with senior debt

11. Representations and Warranties: Contains standard and transaction-specific representations

12. Undertakings: Sets out positive and negative covenants

13. Events of Default: Lists circumstances constituting default and consequences

14. Changes to Parties: Covers assignment, transfer, and syndication provisions

15. Administration: Contains notice provisions, calculations, and other administrative matters

16. Governing Law and Enforcement: Specifies governing law and enforcement mechanisms

What sections are optional to include in a Mezzanine Loan Agreement?

1. Conversion Rights: Required if the mezzanine loan includes rights to convert debt to equity

2. Warrants: Include if warrants are part of the financing package

3. Intercreditor Provisions: Required if not covered in a separate intercreditor agreement

4. Equity Kickers: Include if the financing includes equity participation rights

5. Tax Gross-Up and Indemnities: Include detailed tax provisions if cross-border elements exist

6. Increased Costs and Illegality: Include if required by lender's policy or regulatory requirements

7. Parent Company Guarantee: Include if upstream guarantees are part of the security package

8. Financial Covenants: Include if specific financial covenants are required beyond those in senior facility

What schedules should be included in a Mezzanine Loan Agreement?

1. Initial Conditions Precedent: Detailed list of required conditions precedent documents

2. Form of Drawdown Request: Template for borrower to request drawdown

3. Calculation of Interest: Detailed provisions for interest calculations including PIK mechanisms

4. Form of Transfer Certificate: Template for transferring loan participations

5. Security Documents: List and copies of all security documents

6. Conversion Mechanics: Detailed procedures for implementing any conversion rights

7. Disclosure Schedule: Borrower's disclosures against representations and warranties

8. Repayment Schedule: Schedule of repayment dates and amounts if amortizing

9. Financial Covenants Calculations: Formulas and definitions for financial covenant calculations

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Australia

Publisher

Ƶ

Document Type

Finance Agreement

Cost

Free to use
Relevant legal definitions

























































































Clauses















































Relevant Industries

Real Estate Development

Infrastructure

Mining and Resources

Private Equity

Manufacturing

Technology Scale-ups

Healthcare

Renewable Energy

Commercial Property

Retail Development

Hospitality

Agricultural Business

Relevant Teams

Legal

Finance

Treasury

Corporate Development

Risk Management

Compliance

Credit

Investment

Corporate Banking

Portfolio Management

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Corporate Lawyer

Legal Counsel

Investment Manager

Credit Risk Manager

Corporate Banking Manager

Debt Fund Manager

Private Equity Manager

Financial Controller

Compliance Officer

Company Secretary

Investment Director

Portfolio Manager

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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