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Loan Agreement Term Sheet for Hong Kong

Loan Agreement Term Sheet Template for Hong Kong

A loan agreement term sheet is a preliminary document that outlines the key commercial and legal terms of a proposed loan facility in Hong Kong. Operating under Hong Kong's common law system and financial regulations, including the Banking Ordinance (Cap. 155) and Money Lenders Ordinance (Cap. 163), this document serves as a foundation for the subsequent detailed loan agreement. It captures essential elements such as facility amount, interest rates, repayment terms, key conditions precedent, and principal covenants, while providing a framework for negotiation between the lender and borrower.

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What is a Loan Agreement Term Sheet?

The Loan Agreement Term Sheet is a crucial preliminary document used in Hong Kong's lending landscape to establish the framework for a loan transaction. It is typically prepared after initial commercial discussions but before the detailed loan documentation phase, serving as a roadmap for the transaction and subsequent documentation. The term sheet captures the material commercial terms, conditions, and legal requirements that will form the basis of the final loan agreement, reflecting compliance with Hong Kong's banking regulations and financial services framework. This document is essential for both parties to align their understanding of the proposed facility terms and expedite the preparation of full documentation. While generally non-binding except for certain provisions (such as confidentiality and exclusivity), it sets the foundation for the binding loan agreement that follows.

What sections should be included in a Loan Agreement Term Sheet?

1. Parties: Identification of lender(s) and borrower(s) with full legal names and addresses

2. Background: Brief context of the loan facility and purpose

3. Definitions: Key terms used throughout the term sheet

4. Facility Type and Amount: Type of loan facility (term loan, revolving, etc.) and principal amount

5. Purpose: Permitted uses of the loan proceeds

6. Interest Rate and Fees: Interest rate structure, commitment fees, and other applicable fees

7. Availability Period: Period during which the loan can be drawn

8. Repayment Terms: Repayment schedule, installments, and final maturity date

9. Key Conditions Precedent: Essential conditions to be satisfied before drawdown

10. Key Covenants: Principal financial and operational covenants

11. Events of Default: Key events triggering default

12. Governing Law: Specification of Hong Kong law as governing law

13. Binding Effect: Statement on which terms are legally binding

What sections are optional to include in a Loan Agreement Term Sheet?

1. Security: Details of any collateral or security arrangements, used when the loan is secured

2. Guarantees: Information about guarantors and guarantee terms, included when third-party guarantees are required

3. Insurance: Required insurance coverage, included when specific insurance requirements exist

4. Tax Provisions: Tax-related terms and withholding requirements, included for cross-border or complex lending structures

5. Syndication Rights: Terms for syndication or participation, included for larger loans that may be syndicated

6. Currency and Multi-currency Provisions: Used when the loan involves multiple currencies or currency conversion options

7. Market Disruption: Provisions for market disruption events, included for HIBOR-based or other market-rate-based loans

8. Assignment and Transfer: Terms for transfer of loan participations, included for transferable or tradeable facilities

What schedules should be included in a Loan Agreement Term Sheet?

1. Schedule 1 - Drawdown Schedule: Detailed schedule of proposed drawdown dates and amounts

2. Schedule 2 - Repayment Schedule: Detailed amortization or repayment schedule

3. Schedule 3 - Fee Schedule: Detailed breakdown of all applicable fees

4. Schedule 4 - Form of Drawdown Notice: Template for drawdown requests

5. Schedule 5 - Security Details: Detailed description of security assets and perfection requirements

6. Schedule 6 - Financial Covenants Calculations: Detailed methodology for calculating financial covenants

7. Appendix A - Conditions Precedent Checklist: Comprehensive list of required conditions precedent documents

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

Hong Kong

Publisher

Ƶ

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions








































Clauses




























Relevant Industries

Banking & Financial Services

Real Estate & Property Development

Manufacturing & Industrial

Technology & Telecommunications

Retail & Consumer Goods

Infrastructure & Construction

Healthcare & Pharmaceuticals

Energy & Utilities

Transportation & Logistics

Professional Services

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Credit

Corporate Secretarial

Banking Operations

Corporate Finance

Deal Advisory

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Legal Counsel

Corporate Lawyer

Relationship Manager

Credit Risk Manager

Loan Officer

Investment Banker

Transaction Manager

Compliance Officer

Financial Controller

Corporate Secretary

Banking Executive

Senior Finance Manager

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