The Facility Letter is a crucial banking document used in New Zealand's financial services sector to formalize lending arrangements between financial institutions and borrowers. It is typically issued after initial credit approval but before the disbursement of funds, serving as both an offer letter and, upon acceptance, a binding contract. The document must align with New Zealand's regulatory framework, including banking regulations and consumer protection laws. A Facility Letter includes essential information such as the facility amount, purpose, interest rates, fees, repayment terms, security requirements, conditions precedent, and key undertakings. It's particularly important in commercial lending, property finance, and business banking, where it provides clarity and certainty to all parties while ensuring compliance with legal and regulatory requirements. The document can be used for various types of credit facilities, from simple term loans to complex revolving credit facilities.
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1. Date and Address Block: Full details of the borrower including registered address
2. Salutation: Formal greeting to the borrower
3. Reference Line: Reference to any previous discussions or applications
4. Facility Overview: Brief introduction stating the purpose of the letter and confirmation of facility approval
5. Borrower Details: Full legal name and details of the borrower(s)
6. Facility Details: Type of facility, amount, purpose, and availability period
7. Interest and Fees: Interest rate, calculation method, fees and charges applicable
8. Repayment Terms: Repayment schedule, method, and frequency
9. Conditions Precedent: Conditions that must be satisfied before the facility becomes available
10. Key Undertakings: Core obligations of the borrower during the facility period
11. Events of Default: Circumstances that would constitute a default
12. Governing Law: Confirmation that New Zealand law governs the facility
13. Acceptance Section: Space for borrower's signature to indicate acceptance of terms
1. Security Requirements: Include when the facility is secured, detailing the required security and its terms
2. Guarantor Details: Required when the facility includes guarantors
3. Financial Covenants: Include for corporate borrowers or larger facilities requiring financial ratio maintenance
4. Insurance Requirements: Include when specific insurance coverage is required as part of the facility
5. Review Events: Include for facilities with periodic review requirements
6. Hedging Requirements: Include when interest rate or foreign exchange hedging is mandatory
7. Facility-Specific Conditions: Include for specialized facilities like construction loans or trade finance
8. Multiple Draw Down Provisions: Include for facilities with multiple drawing requirements
9. Cross-Default Provisions: Include when the borrower has multiple facilities or relationships with the lender
1. Schedule 1 - Facility Summary: Detailed breakdown of facility amounts, limits, and sub-facilities if applicable
2. Schedule 2 - Fee Schedule: Comprehensive list of all applicable fees and charges
3. Schedule 3 - Drawdown Notice: Template form for requesting drawings under the facility
4. Schedule 4 - Conditions Precedent Checklist: Detailed list of all required documents and conditions
5. Schedule 5 - Security Details: Detailed description of security requirements and documentation
6. Schedule 6 - Financial Covenant Calculations: Formulas and definitions for financial covenant calculations
7. Appendix A - Standard Terms and Conditions: Bank's standard terms and conditions applicable to the facility
8. Appendix B - Compliance Certificate: Template for periodic compliance certification
Authors
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
Real Estate and Property
Construction and Infrastructure
Manufacturing
Retail and Commerce
Agriculture and Farming
Technology and Software
Healthcare
Education
Transport and Logistics
Professional Services
Hospitality and Tourism
Mining and Resources
Energy
Relevant Teams
Legal
Finance
Credit Risk
Compliance
Commercial Banking
Corporate Banking
Treasury
Operations
Credit Administration
Risk Management
Business Development
Relationship Management
Documentation
Loan Administration
Relevant Roles
Chief Financial Officer
Finance Director
Treasury Manager
Financial Controller
Commercial Banking Manager
Credit Risk Manager
Relationship Manager
Legal Counsel
Compliance Officer
Corporate Banking Officer
Loan Officer
Credit Analyst
Business Development Manager
Company Secretary
Managing Director
Finance Manager
Account Manager
Risk Assessment Officer
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