Umbrella Facility Agreement

Despite the above projects, borrowers must carefully compare the potential cost savings of a base fund facility with the potential operating funds of a standard financing facility. While, as noted above, one of the most important savings of a fund facility is the lack of commitment when a fund is very active and probably uses a large portion of its available facilities, the actual amount of commitment fees paid for a fully committed facility (i.e. a standard fund financing facility) will be small. For this type of fund, royalty savings are unlikely to be critical to the use of a standard financing facility or support facility. Finally, from a cost perspective, a non-binding facility could be beneficial from the individual`s point of view, since any new facility requires a credit authorization, which could, however, delay the borrower`s plans to return to a specified date. As noted above, a well-developed relationship between the borrower and the lender can help avoid this trap. If the complexity (and therefore the flexibility) of a roofing device can be considered a pro for some sponsors, this complexity is also a potential con. Ensuring sufficient flexibility in the “master-facilitated” agreement (especially when it is the first time a borrower and a lender have entered into a financing facility agreement together) takes considerable time. The facility agreement must have more options than a standard agreement on the financing facilities of the funds, so there will be significant commercial discussions between lenders and borrowers, and lawyers will have to spend more time developing it. In addition, given this additional complexity, an officer may seek additional advice from his lawyer to understand the terms of the facility agreement (which has consequences in terms of time and cost). A variant of Model B uses a common terms agreement (associated with a short credit contract for each borrower) instead of a master-facility contract.

The Common Terms Agreement defines the main part of the credit conditions applicable to each facility, while the short credit contract concluded by each borrower contains the common terms as a reference and documents the terms and conditions agreed on that are appropriate for that borrower and that facility. The tendency of managers to implement MSAs (due to the amount of money investors want to invest) is an important driver of the continued popularity of roofing facilities, prompting investors to seek tailored investment strategies. If a manager can integrate these MMAs into an existing core structure instead of having to go through the process of creating a new structure (or actually create a single fund financing facility for each fund), this should attract the attention of investors and give a good start to the relationship between the manager and the investors. Other benefits for an executive are that investors are attracted to cost savings opportunities (this is a direct benefit to investors and managers, as the return on their investment will be higher, as less fees and costs will be deducted in calculating their profits), and managers will save a lot of time and energy by not managing several individual investments.