The London-based Loan Market Association (LMA) has launched template documents for use in European private placement transactions.
The LMA said that the project to develop the private placement documents was in response to demand from LMA members active in the private placement market, who were keen to promote the development of this product as a viable financing tool in Europe.
“It is hoped that standardisation of documentation will assist in creating a more unified and efficient private placement market,” the LMA added.
The five documents being launched are:
- A recommended form of facility agreement for use in private placement transactions (the PP facility agreement).
- A recommended form of subscription agreement for use in private placement transactions (the PP subscription agreement).
- A recommended form of term sheet for use in private placement transactions.
- A confidentiality agreement for use with the PP facility and PP subscription agreements.
- An associated user guide.
“It was recognised that private placements across Europe currently take varying forms, some of which are loan facilities and some of which are note issuances,” the LMA added.
“Members participating in this market felt that the formulation of standard form templates incorporating both a loan and a note option would be a big step forward in achieving greater efficiencies by providing a common framework and language for those involved in these transactions.
The private placement documents are governed by English law and assume the transaction is unsecured and with an investment grade company as borrower/issuer; however they are drafted in such a way as to be easily adaptable to other governing laws and market sectors. The project also had input from the International Capital Market Association (ICMA) and the UK’s Association of Corporate Treasurers (ACT).
The LMA called the initiative a significant contribution to the development of a European private placement market, complementing the work of the Pan-European Private Placement Working Group coordinated by ICMA, which also includes the Euro PP Working Group (composed of all relevant professional organisations and participants in the French market).
The Euro PP Working Group has also produced French law private placement documents to complement the French Charter for Euro Private Placements released in 2014.
“I believe the creation of standardised private placement documents in Europe will simplify the borrowing process for corporates and has the potential to encourage new liquidity into this market,” commented Calum Macphail, head of corporate private placements for M&G Investments.
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