LMA facility agreements – negotiating the norms

The mechanics underpinning a loan facility remain the same between agreements and have been standardised by the LMA. Recent changes in the tax world, such as FATCA, have meant that advisers have needed to depart from standard form agreements. The door to negotiating has not closed and there are several areas in which a borrower can significantly improve its position without making outrageous demands: managing the treaty lender definition; curtailing a lender’s discretion to make determinations; limiting the scope of the tax indemnity; accounting for secondary market transactions; and ensuring that the agreement doesn’t cut across the borrower’s future plans.