Finance Deals & Syndicated Lending · glossary
The protection that lets a buyer rely on its loan to pay the price. From signing to completion, the lenders may refuse the completion drawing only for a Major Default, an untrue Major Representation or illegality. Their other rights are suspended, not lost. Clause 4.3 · Chapter 4
Explained in Chapter 4, From Term Sheet to Signing, of Finance Deals & Syndicated Lending.
Also explained in M&A Foundations.
A buyer signs the share purchase agreement (SPA) first and pays the price at completion, often months later. In Europe a seller will almost never accept a financing condition, a term that lets the buyer walk away if its loan falls through. So the buyer must pay whether or not its banks lend, and is in breach if the money is missing. The buyer therefore needs certain funds: a loan committed before the SPA is signed, which the lenders can refuse to fund only for a few serious…Read Chapter 4, From Term Sheet to Signing →
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