Bridge Facility Agreement Template for the United Arab Emirates

A Bridge Facility Agreement establishes interim financing arrangements that provide immediate funding while you secure permanent financing solutions. Under United Arab Emirates law, this critical commercial document must comply with UAE Federal Law No. 18 of 2017 (Commercial Transactions Law) and Central Bank regulations, creating legally binding obligations between lenders, borrowers, and other parties involved in temporary credit arrangements.

When do you need this document?

You require a Bridge Facility Agreement when your business needs immediate capital but permanent financing arrangements are still being finalized. This commonly occurs during acquisition financing where you need funds to complete a purchase while arranging long-term debt, or during refinancing periods when existing facilities expire before new arrangements are in place. Real estate developers frequently use bridge facilities to fund construction phases before securing permanent project financing. Corporate restructuring situations also necessitate bridge financing to maintain operations while negotiating comprehensive debt restructuring agreements.

Key legal considerations

The agreement must clearly define facility terms, including principal amount, availability period, and pricing structures that typically incentivize prompt refinancing. Conditions precedent clauses require specific documentation and approvals before fund drawdown, protecting lender interests while ensuring borrower readiness. Security provisions establish collateral arrangements and guarantees, often requiring comprehensive security packages given the temporary nature of the facility. Refinancing obligations create binding commitments to secure permanent financing within specified timeframes, with potential penalties for delays. Default provisions must address various scenarios including refinancing failures, with enforcement mechanisms complying with UAE bankruptcy and commercial laws.

Legal requirements in United Arab Emirates

Bridge Facility Agreements in the UAE must comply with Federal Law No. 18 of 2017 governing commercial transactions and Federal Law No. 14 of 2018 regulating Central Bank operations. Corporate borrowers must demonstrate proper authority under Federal Decree Law No. 32 of 2021 (Commercial Companies Law), including board resolutions and shareholder approvals where required. Security arrangements must comply with UAE Civil Transactions Law No. 5 of 1985, ensuring proper creation and registration of security interests. For Sharia-compliant structures, the agreement must incorporate Islamic financing principles and obtain appropriate religious approvals. Documentation must be properly executed under UAE law, with consideration for local language requirements and notarization procedures. Interest rate provisions must comply with Central Bank regulations, while foreign exchange aspects require adherence to UAE monetary policies and reporting requirements.