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Debt Financing Term Sheet Template for United Arab Emirates

A comprehensive preliminary document outlining the key terms and conditions for a proposed debt financing arrangement under UAE law. This document serves as the foundation for subsequent detailed loan documentation, capturing essential commercial terms including facility amount, interest/profit rates, repayment terms, and security structure. It incorporates UAE-specific regulatory requirements and can accommodate both conventional and Islamic financing structures, while considering the unique aspects of UAE commercial and banking laws, including Federal Law No. 18 of 1993 and UAE Central Bank regulations.

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What is a Debt Financing Term Sheet?

The Debt Financing Term Sheet is a crucial preliminary document used in the United Arab Emirates to establish the fundamental terms of a proposed financing arrangement between lenders and borrowers. It serves as a roadmap for the preparation of detailed facility agreements and related documentation, typically used in situations where significant financing is required for corporate expansions, acquisitions, project development, or working capital needs. The document outlines key commercial terms including facility amount, pricing, tenure, security structure, and major conditions, while considering UAE's dual financial system that accommodates both conventional and Islamic financing principles. While generally non-binding (except for specific provisions like confidentiality), it forms the basis for negotiation and subsequent documentation, incorporating relevant UAE banking regulations and commercial laws.

What sections should be included in a Debt Financing Term Sheet?

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

2. Background: Brief context of the financing requirement and purpose of the facility

3. Definitions: Key terms used throughout the term sheet

4. Facility Type and Purpose: Description of the type of facility (term loan, revolving credit, etc.) and its intended use

5. Facility Amount: The principal amount of the facility and any sub-limits

6. Currency: Specification of the facility currency and any conversion provisions

7. Availability Period: Timeline during which the facility can be drawn

8. Interest/Profit Rate: Applicable interest rate or profit rate structure, including base rate and margin

9. Repayment Terms: Schedule and method of repayment, including any grace period

10. Security Structure: Overview of required security and collateral

11. Key Covenants: Essential financial and operational covenants

12. Conditions Precedent: Key conditions to be satisfied before facility availability

13. Fees: All applicable fees including arrangement, commitment, and processing fees

14. Governing Law: Specification of UAE law as governing law and relevant jurisdiction

15. Status: Non-binding nature of the term sheet (except for specific provisions)

What sections are optional to include in a Debt Financing Term Sheet?

1. Islamic Finance Structure: Required when the facility needs to be Sharia-compliant, detailing the Islamic finance structure (e.g., Murabaha, Ijara)

2. Syndication Provisions: Included when the facility may be syndicated to multiple lenders

3. Green Financing Provisions: Required when the facility is structured as green or sustainable financing

4. Insurance Requirements: Detailed insurance requirements when specific coverage is crucial for the facility

5. Regulatory Approvals: When specific regulatory approvals are required, particularly for regulated industries

6. Currency Hedging: Required when dealing with multiple currencies or currency risk mitigation

7. Tax Considerations: Specific tax-related provisions when cross-border elements are involved

What schedules should be included in a Debt Financing Term Sheet?

1. Indicative Repayment Schedule: Preliminary amortization schedule showing expected repayment dates and amounts

2. Security Assets Schedule: List and description of assets to be provided as security

3. Fees Schedule: Detailed breakdown of all applicable fees and charges

4. Financial Covenants Schedule: Detailed calculations and thresholds for financial covenants

5. Conditions Precedent Checklist: Detailed list of required documents and conditions

6. Know Your Customer Requirements: List of required KYC documents and compliance requirements

7. Form of Drawdown Notice: Template for drawdown requests

8. Contact Details: Key contact information for all parties

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use

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