Consortium Loan Agreement Template for United Arab Emirates

The Consortium Loan Agreement is a sophisticated financing document used when a borrower requires substantial funding that exceeds the capacity or risk appetite of a single lender. This agreement, governed by UAE law and compliant with UAE Central Bank regulations, establishes the framework for multiple lenders to participate in a single loan facility while sharing risk. The document is particularly relevant for large-scale projects, corporate expansions, or significant acquisitions in the UAE market. It addresses crucial aspects such as facility management, security sharing, voting mechanisms, and the appointment of agents to act on behalf of the lender group. The agreement must comply with UAE commercial and banking laws, including Federal Law No. 18 of 1993 (Commercial Code) and Federal Law No. 14 of 2018 (UAE Central Bank Law), while potentially incorporating Islamic finance principles where required.

1. Parties: Identifies all parties including borrower(s), lenders in the consortium, security agent, and facility agent

2. Background: Sets out the context of the loan, purpose, and basic structure of the consortium arrangement

3. Definitions and Interpretation: Comprehensive definitions of terms used throughout the agreement and interpretation rules

4. The Facility: Details of the loan facility, including amount, purpose, and availability period

5. Conditions Precedent: Conditions that must be satisfied before drawdown

6. Drawdown: Procedures and requirements for utilization of the facility

7. Interest: Interest calculation, periods, and payment provisions

8. Repayment: Terms of repayment including scheduled payments and prepayment provisions

9. Agent Bank Provisions: Role, responsibilities, and powers of the facility agent

10. Security Agent Provisions: Role and powers of the security agent in managing collateral

11. Consortium Provisions: Decision-making processes, voting rights, and relationship between lenders

12. Representations and Warranties: Standard and transaction-specific representations and warranties

13. Covenants: Financial and general covenants applicable to the borrower

14. Events of Default: Circumstances constituting default and consequences

15. Changes to Parties: Transfer and assignment provisions for lenders and borrower

16. Administration: Administrative provisions including payments, calculations, and notices

17. Governing Law and Jurisdiction: Choice of UAE law and jurisdiction provisions