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Mezzanine Loan Agreement Template for Hong Kong

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Key Requirements PROMPT example:

Mezzanine Loan Agreement

"I need a Mezzanine Loan Agreement under Hong Kong law for a HKD 200 million facility to a real estate development company, including PIK interest options and warrant rights for up to 10% of the borrower's equity."

Document background
The Mezzanine Loan Agreement is utilized when a company requires financing that bridges the gap between senior debt and equity financing. This sophisticated financing instrument is particularly relevant for transactions requiring additional leverage beyond traditional senior debt, such as acquisitions, real estate developments, or corporate expansion projects. The agreement, governed by Hong Kong law, typically provides for higher interest rates compared to senior debt, often including payment-in-kind (PIK) interest options, and may incorporate equity-like features such as warrants or conversion rights. The document must comply with Hong Kong's legal framework, including the Companies Ordinance, Securities and Futures Ordinance, and relevant financial regulations. The agreement includes detailed provisions on intercreditor relationships, security arrangements, financial covenants, and potential equity participation rights, making it a crucial document for complex financing structures in the Hong Kong market.
Suggested Sections

1. Parties: Identifies the lender(s), borrower(s), and any guarantors or security providers

2. Background: Sets out the context of the mezzanine financing and its relationship to other financing arrangements

3. Definitions and Interpretation: Defines key terms and establishes interpretation principles for the agreement

4. The Facility: Details the amount, purpose, and basic terms of the mezzanine loan

5. Conditions Precedent: Lists the conditions that must be satisfied before drawdown

6. Drawdown: Specifies the drawdown mechanics and notice requirements

7. Interest: Details interest rates, calculation methods, and payment terms

8. Repayment and Prepayment: Sets out the repayment schedule and any prepayment provisions

9. Security: Describes the security package and ranking

10. Representations and Warranties: Contains standard and transaction-specific representations

11. Covenants: Details positive, negative, and financial covenants

12. Events of Default: Lists circumstances constituting default and consequences

13. Changes to Parties: Addresses assignment and transfer provisions

14. Payment Mechanics: Details payment procedures and calculations

15. Administration: Covers notices, calculations, and other administrative matters

16. Governing Law and Enforcement: Specifies governing law and jurisdiction

Optional Sections

1. Equity Kicker: Used when the mezzanine loan includes rights to acquire equity in the borrower

2. Conversion Rights: Included when the loan can be converted into equity

3. PIK Interest Provisions: Required when interest can be paid in kind

4. Subordination Provisions: Detailed subordination terms if not covered in a separate intercreditor agreement

5. Exit Fee: Terms for additional fees payable on exit events

6. Warrants: Details of any warrant instruments attached to the loan

7. Board Rights: Provisions for lender board representation or observer rights

8. Information Rights: Enhanced information rights beyond standard reporting

Suggested Schedules

1. Form of Drawdown Request: Standard form for requesting loan drawdowns

2. Conditions Precedent Documents: Detailed list of required CP documents

3. Form of Transfer Certificate: Template for transferring loan participations

4. Financial Covenants and Calculations: Detailed financial covenant definitions and calculation methodologies

5. Security Documents: Forms of security documents and guarantees

6. Disclosure Schedule: Borrower disclosures against representations and warranties

7. Repayment Schedule: Detailed amortization or repayment schedule if applicable

8. Form of Compliance Certificate: Template for periodic compliance reporting

9. Warrant Instruments: Forms of any warrant instruments if applicable

10. Existing Indebtedness: Schedule of permitted existing debt

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈ˰æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions























































































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Relevant Industries

Real Estate Development

Infrastructure

Private Equity

Manufacturing

Technology

Healthcare

Retail

Hospitality

Energy

Construction

Telecommunications

Financial Services

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Corporate Development

Investment

Credit

Operations

Strategy

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Corporate Lawyer

Legal Counsel

Investment Manager

Private Equity Director

Risk Manager

Compliance Officer

Corporate Development Director

Financial Controller

Investment Banker

Debt Fund Manager

Portfolio Manager

Transaction Manager

Industries










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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