We await LMA amendments

Author: | Published: 1 Mar 2009

The insolvency of Lehman Brothers and certain Icelandic banks has highlighted issues with the ability of lenders to fund the re-drawing of rollover loans under syndicated revolving credit facilities.

Some commentators have put forward proposals for an agent bank to effect a rollover of a revolving credit loan without requiring the actual repayment and redrawing of funds. But these require intervention by the agent bank, which may expose it to liability.

A typical rollover Typically, under the terms of a revolving credit facility, the borrower is required to repay and redraw borrowings at the end of their interest period (the maturity date). This contrasts with term loan facilities where loans are repaid only on the final repayment date. The process of repaying and redrawing is known as rolling over. The loans that are repaid and redrawn are referred to as rollover loans. The borrower will rollover a loan on the maturity...