After all the detail is being confirmed, MLAB shall arrange syndication presentation with potential participating bank with below documents: After an in-depth analysis, MLAB shall confirm the Term Sheet with Borrower on the financing structure with pricing (interest rate and arrangement fee), covenants, conditions precedent, condition subsequent, monitoring mechanism, undertakings etc. Structuring is the most time-consuming part of a syndication and it is also the most important part to a syndication closing as a complicated financing is heavily rely on the structure to “Control” and “Mitigate” credit risk. The structure of transaction is designed according to the borrower’s corporate structure, repayment sources, and financial data of borrower. First, MLAB will conduct structuring work which is base on the financing purpose to structure a financing that could fit the risk appetite of potential lenders. MLAB will prepare a draft term sheet to negotiate with Borrower on the syndication and provide opinion what strategy should play in order to obtain the financing support from participating banks such as the interest rate level, fee level, tenor, covenants, banks being invited and collateral to be provided. MLAB is mandated by the Borrower to arrange the whole logistic of syndication including documentation, origination and distribution. MLAB play a pivot role and control the success of the syndication closing. The key player of a syndication is the lead coordinator – Mandated Lead Arranger and Bookrunner (“MLAB”). In a syndication loan, there are roles for different function. It is hard to understand by an outsider on the name of Mandated Lead Arranger, Arranger, Loan Agent, Underwriter, etc. Finally, a single loan agreement with agreed terms will be signed by all parties in order to bind all the interest in a single agreement. When fundamental detail is confirmed between MLAB and borrower, negotiation between the MLAB and participating banks (“participant”) kick off until all the terms are agreed by participants. After the borrower mandated a bank so call Lead Arranger or Mandated Lead Arranger and Bookrunner (“MLAB”) to arrange the syndication, the borrower shall negotiate the terms and detail of the loan with the MLAB. At this point of time, a term sheet shall be provided by the invited relationship bank. During the process, a company (“borrower”) solicits the relationship bank to form a syndication group and seek for the offering from relationship banks. The use of proceeds for the syndication loan included but not limited to general working capital, refinancing, capital investment for new project, merge and acquisition, etc. A company would consider a syndication loan when it has a substantial financing needs which is one off and different from general pattern. Syndication loan is a sequential process arose from business needs.
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