Debt Financing Term Sheet for Australia

Debt Financing Term Sheet Template for Australia

A comprehensive preliminary document governed by Australian law that outlines the key commercial and legal terms of a proposed debt financing arrangement. This document serves as the foundation for the preparation of detailed facility agreements and security documentation. It captures essential elements including facility amount, interest rates, repayment terms, security structure, key conditions precedent, and principal undertakings. While generally non-binding (except for specific provisions like confidentiality and exclusivity), it represents a crucial step in the negotiation process and provides the framework for the final financing documentation.

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What is a Debt Financing Term Sheet?

The Debt Financing Term Sheet is a crucial preliminary document used in Australian financing transactions to establish the fundamental terms and conditions of a proposed debt facility. It is typically prepared after initial commercial discussions between the lender and borrower, but before the drafting of detailed facility documentation. The term sheet serves multiple purposes: it confirms the parties' preliminary understanding, provides a framework for the preparation of long-form documentation, and identifies key commercial and legal issues that need to be resolved. While predominantly non-binding, certain provisions such as confidentiality, costs, and exclusivity are usually expressed to be legally binding. The document is especially relevant in corporate, project, and acquisition financing scenarios, where it helps streamline the negotiation process and reduce transaction costs by ensuring alignment on key terms before detailed documentation begins.

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

1. Parties: Identification of the lender(s), borrower(s), guarantor(s) and any other relevant parties

2. Background: Brief context of the proposed financing arrangement and its purpose

3. Definitions: Key terms used throughout the term sheet

4. Facility Details: Type of facility, facility amount, purpose, availability period

5. Interest and Fees: Interest rate, calculation basis, payment frequency, commitment fees, establishment fees

6. Repayment Terms: Repayment schedule, mandatory prepayments, voluntary prepayments

7. Security Structure: Overview of security package, guarantees, security ranking

8. Key Conditions Precedent: Essential conditions to be satisfied before drawdown

9. Key Undertakings: Financial covenants, general undertakings, information undertakings

10. Events of Default: Key events triggering default

11. Governing Law: Applicable law and jurisdiction

12. Non-Binding Nature: Statement of which provisions are binding/non-binding

13. Confidentiality: Confidentiality obligations regarding the term sheet and negotiations

14. Expiry Date: Validity period of the term sheet

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

1. Hedging Requirements: Required for facilities with interest rate or foreign exchange hedging obligations

2. Syndication Provisions: Include when the facility may be syndicated to other lenders

3. Market Flex: Include for facilities that may be syndicated, allowing terms to be adjusted for successful syndication

4. Clear Market: Include for larger facilities to restrict borrower from accessing other debt markets

5. Assignment and Transfer: Include for facilities where secondary market trading is contemplated

6. Green Loan Provisions: Include for green or sustainability-linked loans

7. Multi-currency Provisions: Include if the facility can be drawn in multiple currencies

8. Accordion Feature: Include if facility amount may be increased in the future

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

1. Financial Covenants Schedule: Detailed financial covenant calculations and definitions

2. Security Package Details: Comprehensive list of security documents and secured assets

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

4. Repayment Schedule: Detailed amortization schedule if applicable

5. Form of Drawdown Request: Template for borrower to request drawdown

6. Term Sheet Acceptance Form: Form for parties to indicate acceptance of the term sheet

Authors

Alex Denne

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

Jurisdiction

Australia

Publisher

Genie AI

Document Type

Loan Agreement

Sector

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Banking & Financial Services

Real Estate & Property

Infrastructure & Construction

Mining & Resources

Manufacturing & Industrial

Healthcare & Medical

Technology & Communications

Retail & Consumer

Energy & Utilities

Agriculture & Agribusiness

Transportation & Logistics

Education & Training

Relevant Teams

Legal

Finance

Treasury

Corporate Development

Risk Management

Credit

Compliance

Executive Leadership

Company Secretariat

Corporate Advisory

Banking

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Corporate Lawyer

Finance Manager

Investment Banker

Relationship Manager

Credit Analyst

Risk Manager

Company Secretary

Managing Director

Chief Executive Officer

Commercial Director

Corporate Development Manager

Senior Banker

Legal Counsel

Industries
Corporations Act 2001 (Cth): Primary legislation governing corporate entities, financial services, and securities in Australia. Relevant for corporate borrowers, security arrangements, and financial services licensing requirements.
National Consumer Credit Protection Act 2009 (NCCP Act): Regulates consumer credit activities and establishes responsible lending obligations. Must be considered if there's any possibility the borrower could be classified as a retail client.
Personal Property Securities Act 2009 (PPSA): Governs the creation, registration and enforcement of security interests in personal property. Essential for any security arrangements in the financing.
Banking Act 1959: Regulates banking activities and financial institutions in Australia. Relevant for understanding the regulatory framework applicable to lenders.
Anti-Money Laundering and Counter-Terrorism Financing Act 2006: Imposes obligations on financial institutions regarding customer identification and transaction monitoring. Must be considered for compliance in financing arrangements.
Income Tax Assessment Act 1997: Contains provisions relevant to the tax treatment of debt financing, including deductibility of interest and other financing costs.
Australian Securities and Investments Commission Act 2001: Provides consumer protection provisions for financial services and establishes ASIC's regulatory powers.
Financial Sector (Collection of Data) Act 2001: Relevant for reporting requirements that may apply to certain types of financing arrangements.
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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