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Mezzanine Debt Term Sheet

Mezzanine Debt Term Sheet Template for United Arab Emirates

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Key Requirements PROMPT example:

Mezzanine Debt Term Sheet

"I need a Mezzanine Debt Term Sheet for a UAE-based real estate development company seeking AED 200 million in financing, with both cash and PIK interest components, and including conversion rights that can be exercised by March 2025."

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Document background
The Mezzanine Debt Term Sheet is a preliminary document used in UAE financing transactions to outline the principal terms and conditions of a proposed mezzanine financing arrangement. It serves as a bridge between initial commercial discussions and final documentation, typically employed in situations where companies seek additional funding beyond senior debt but before equity. The document reflects UAE legal requirements and market practice, including compliance with Federal Law No. 32 of 2021 (Commercial Companies Law) and Federal Law No. 14 of 2018 (Central Bank Law). It captures essential terms such as pricing structure, security package, intercreditor arrangements, and any equity-linked features, forming the basis for negotiation and eventual preparation of definitive financing documents.
Suggested Sections

1. Parties: Identification of the lender(s), borrower(s), sponsor(s), and any guarantors

2. Background: Brief description of the transaction context and purpose of the mezzanine financing

3. Definitions: Key terms used throughout the term sheet

4. Transaction Overview: Summary of the financing structure, amount, and purpose

5. Facility Terms: Key terms including type, amount, purpose, availability period, and tenor

6. Pricing and Fees: Interest rate, payment terms, upfront fees, and other monetary considerations

7. Security Package: Description of collateral, guarantees, and security interests

8. Ranking and Subordination: Priority position relative to other debt and intercreditor principles

9. Conditions Precedent: Requirements to be satisfied before funding

10. Key Covenants: Financial and operational covenants, including financial ratios and restrictions

11. Events of Default: Circumstances that trigger default and enforcement rights

12. Governing Law and Jurisdiction: Applicable law and dispute resolution provisions

Optional Sections

1. Equity Kickers: Terms of any equity participation rights or warrants, if applicable

2. Board Rights: Observer or voting rights on the borrower's board, if applicable

3. Exit Rights: Terms related to change of control, IPO, or other exit scenarios

4. Conversion Rights: Terms for converting debt to equity, if applicable

5. Information Rights: Specific reporting and information access requirements beyond standard covenants

6. Tax Considerations: Specific tax structuring elements if relevant to the transaction

7. Shareholder Matters: Any specific requirements or restrictions related to shareholders

8. Islamic Finance Compliance: Specific structures and terms for Sharia compliance if required

Suggested Schedules

1. Corporate Structure Chart: Diagram showing the corporate structure and security package

2. Sources and Uses of Funds: Detailed breakdown of funding sources and intended uses

3. Key Financial Terms Summary: Summary table of principal financial terms and calculations

4. Indicative Timetable: Proposed timeline for documentation and closing

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Mezzanine Facility
Facility Amount
Interest Rate
PIK Interest
Cash Interest
Maturity Date
Security Package
Senior Debt
Subordination
Financial Covenants
Change of Control
Event of Default
Business Day
Closing Date
Conditions Precedent
Security Agent
Facility Agent
Intercreditor Agreement
Borrower
Guarantor
Sponsor
Permitted Indebtedness
Security Interest
Material Adverse Effect
Utilization
Interest Period
Default Interest
Mandatory Prepayment
Voluntary Prepayment
Equity Conversion Rights
Exit Event
Financial Statements
Governing Law
Security Documents
Leverage Ratio
Interest Coverage Ratio
Availability Period
Upfront Fee
Arrangement Fee
Commitment Fee
Drawdown Notice
Default Notice
Enforcement Action
Hedge Agreement
Permitted Distribution
Restricted Payment
Transaction Documents
Warrants
Clauses
Facility Terms
Interest and Fees
Security
Subordination
Conditions Precedent
Representations and Warranties
Financial Covenants
Information Covenants
General Undertakings
Events of Default
Acceleration Rights
Board Rights
Voting Rights
Exit Rights
Transfer Rights
Equity Conversion
Registration Rights
Tag-Along Rights
Drag-Along Rights
Confidentiality
Assignment
Amendments and Waivers
Notices
Governing Law
Dispute Resolution
Enforcement
Distribution Rights
Information Rights
Control Rights
Change of Control
Anti-dilution
Intercreditor Provisions
Mandatory Prepayment
Voluntary Prepayment
Relevant Industries

Real Estate Development

Infrastructure

Healthcare

Hospitality

Manufacturing

Technology

Retail

Energy

Transportation

Education

Financial Services

Construction

Relevant Teams

Legal

Finance

Treasury

Risk Management

Corporate Development

Compliance

Credit

Investment Banking

Private Equity

Corporate Finance

Business Development

Relevant Roles

Chief Financial Officer

Finance Director

Investment Manager

Legal Counsel

Corporate Lawyer

Investment Banker

Private Equity Manager

Treasury Manager

Risk Manager

Corporate Development Director

Managing Director

Business Development Manager

Financial Controller

Compliance Officer

Credit Risk Officer

Industries
UAE Federal Law No. 32 of 2021 (Commercial Companies Law): Governs corporate structures and business operations in the UAE, including provisions related to debt instruments and corporate borrowing.
UAE Federal Law No. 5 of 1985 (Civil Transactions Law): Provides the fundamental framework for contractual obligations and civil transactions, including principles of contract formation and enforcement.
UAE Federal Decree Law No. 9 of 2016 (Bankruptcy Law): Regulates bankruptcy proceedings and creditor rights, crucial for understanding default scenarios and remedies in mezzanine financing.
UAE Federal Law No. 4 of 2000 (Capital Markets Law): Regulates securities and financial instruments, relevant for any traded or transferable aspects of the mezzanine debt.
UAE Federal Law No. 14 of 2018 (Central Bank Law): Governs banking and financial institutions, including regulations on lending practices and financial services.
UAE Federal Law No. 20 of 2016 (Pledge Law): Governs the creation and enforcement of security interests over movable assets, relevant for collateral aspects of mezzanine financing.
DIFC Law No. 1 of 2008 (Law of Security): For Dubai International Financial Centre transactions, governs security interests and enforcement rights in the DIFC jurisdiction.
UAE Federal Law No. 10 of 1980 (Central Bank Law): Contains provisions on interest rates and banking regulations that may affect the financing terms.
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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