The SBLC Non-Recourse Loan agreement is utilized when a borrower seeks financing against a Standby Letter of Credit, with the lender's recourse limited primarily to the SBLC itself. This financing structure is particularly valuable for businesses seeking to leverage their banking instruments while limiting their broader liability exposure. The document must comply with Australian financial services regulations, including the Banking Act 1959 and ASIC requirements. It includes comprehensive provisions for SBLC verification, loan disbursement procedures, security arrangements, and enforcement mechanisms, while clearly establishing the non-recourse nature of the facility. This type of agreement is commonly used in international trade finance, project funding, and other commercial financing arrangements where SBLCs serve as the primary security.
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1. Parties: Identification of the lender, borrower, and any guarantors or security providers
2. Background: Context of the transaction, including the SBLC's existence and the purpose of the loan
3. Definitions: Key terms used throughout the agreement, including SBLC-specific terminology
4. SBLC Verification and Requirements: Details of the SBLC, verification process, and conditions for acceptance
5. Loan Amount and Purpose: Specification of the loan amount, typically as a percentage of SBLC value, and permitted use
6. Non-Recourse Provisions: Clear statement of the non-recourse nature and limitations of borrower's liability
7. Conditions Precedent: Conditions that must be satisfied before the loan becomes effective
8. Security Arrangements: Details of the SBLC as security and any additional security requirements
9. Representations and Warranties: Standard and SBLC-specific representations by the borrower
10. Events of Default: Circumstances constituting default and consequences
11. Enforcement Rights: Lender's rights and limitations in case of default, specifically regarding the SBLC
12. Costs and Fees: All fees, charges, and cost allocations
13. Governing Law and Jurisdiction: Specification of Australian law and jurisdiction
1. Bank Confirmation: Section for bank acknowledgment of the SBLC assignment, used when required by the issuing bank
2. Currency Provisions: Required for cross-border transactions where SBLC and loan are in different currencies
3. Insurance Requirements: Used when additional insurance coverage is required beyond the SBLC
4. Security Trustee Provisions: Required when a security trustee is appointed to manage the SBLC
5. Syndication Provisions: Included when multiple lenders are involved in the facility
6. Step-In Rights: Optional provisions for lender intervention rights in specific circumstances
1. SBLC Details: Copy and full details of the SBLC including issuing bank details
2. Fee Schedule: Detailed breakdown of all fees, charges, and commission structures
3. Conditions Precedent Documents: List of required documents and verifications
4. Form of Drawdown Notice: Template for loan drawdown requests
5. Form of SBLC Assignment: Template for SBLC assignment documentation
6. Verification Requirements: Detailed procedures for SBLC verification and authentication
7. Contact Details: Key contacts for all parties and authorized signatories
Authors
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
International Trade
Commercial Real Estate
Infrastructure Development
Manufacturing
Energy and Resources
Construction
Import/Export
Wholesale Trade
Project Finance
Relevant Teams
Legal
Finance
Treasury
Risk Management
Compliance
Trade Finance
Corporate Finance
Credit
Commercial Operations
Banking Relations
Relevant Roles
Chief Financial Officer
Finance Director
Treasury Manager
Legal Counsel
Commercial Director
Risk Manager
Credit Manager
Trade Finance Manager
Banking Relationship Manager
Compliance Officer
Corporate Finance Manager
Financial Controller
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