Credit Agreement Mfn Provision

While this aspect of the AML provisions may be important for some borrowers in the area of business credit, it is believed that the sponsor-run borrower market is unlikely to accept it. The application of the most important provisions varies from one agreement to another as regards the extent, duration and nature of the indebtedness to which they apply. An experienced borrower will fully understand the circumstances in which financing a complementary acquisition could trigger the highest protection of its credit facility and may lead to a revaluation of existing debt. Indeed, the spectre of such a revaluation should give a pause to any borrower considering this financing approach. Given the prevalence of incremental facilities in recent years, many sponsors and borrowers who use incremental facilities (or, at the very least, negotiate the possibility of including incremental facility arrangements in facility arrangements), will benefit from a preferred form of incremental facility arrangements with which they feel comfortable and which they use for most of their credit operations. In view of the above, it remains to be seen whether or not the wording of AMAs will be taken up in whole or in part by the credit market, while the incremental facility provisions introduced by LMA in its recommended form of leverage agreement do not seek to take into account all the relevant potential variables that can be seen in today`s incremental facilities. They are a useful starting point, especially for a number of business borrowers and the small and mid-cap sectors. .