TYPES OF FACILITY COMMONLY SYNDICATED

Two types of loan facility are commonly syndicated: term loan facilities and revolving 

loan facilities. 

2.1  Term Loan Facility : Under a term loan facility the lenders provide a specified capital sum over a set period of time, known as the "term".  Typically, the borrower is allowed a short period after executing the loan (the "availability" or "commitment" period), during which time it can draw loans up to a specified maximum facility limit.  Repayment may be in instalments (in which case the facility is commonly described as "amortising") or there may be one payment at the end of the facility (in which case the facility is commonly described as having "bullet" repayment terms).  Once a term loan has been repaid by the borrower, it cannot be re-drawn. 

2.2  Revolving Loan Facility: A revolving loan facility provides a borrower with a maximum aggregate amount of capital, available over a specified period of time.  However, unlike a term loan, the revolving loan facility allows the borrower to drawdown, repay and re-draw loans advanced to it of the available capital during the term of the facility.  Each loan is borrowed for a set period of time, usually one, three or six months, after which time it is technically repayable.  Repayment of a revolving loan is achieved either by scheduled reductions in the total amount of the facility over time, or by all outstanding loans being repaid on the date of termination.  A revolving loan made to refinance another revolving loan which matures on the same date as the 

drawing of the second revolving loan is known as a "rollover loan", if made in the same currency and drawn by the same borrower as the first revolving loan.  The conditions to be satisfied for drawing a rollover loan are typically less onerous than for other loans. A revolving loan facility is a particularly flexible financing tool as it may be drawn by a borrower by way of straightforward  loans, but it is also possible to incorporate different types of financial accommodation within it  - for example, it is possible to 

incorporate a letter of credit facility, swingline facility or overdraft facility within the terms of a revolving credit facility. This is often achieved by creating a sublimit within the overall revolving facility, allowing a certain amount of the lenders' commitment to be drawn in the form of these different facilities.  

2.3  General: Syndicated loan agreements may contain only a term or revolving facility or they can contain a combination of both or several of each type (for example, multiple term loans in different currencies and with different maturity profiles are not uncommon). There can be one borrower or a group of borrowers with provision allowing for the accession of new borrowers under certain circumstances from time to time. The facility may include a guarantor or guarantors and again provisions may be incorporated allowing for additional guarantors to accede to the agreement.