Bridge Facility Agreement Template for Canada

The Bridge Facility Agreement is utilized when a company requires immediate financing but expects to replace it with longer-term funding or complete a specific transaction in the near future. Common scenarios include M&A transactions, real estate acquisitions, or refinancing situations where timing gaps exist between funding needs and permanent financing availability. The agreement, governed by Canadian law, typically includes step-up pricing mechanisms to incentivize refinancing, detailed conditions precedent, and specific repayment triggers. It must comply with Canadian federal banking regulations and provincial securities laws, particularly regarding interest rate calculations, security registration, and disclosure requirements. The Bridge Facility Agreement will often contain provisions for security interests under relevant provincial Personal Property Security Acts and consider requirements under the federal Bank Act for regulated lenders.

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

2. Background: Context of the bridge facility, including purpose and relationship to permanent financing

3. Definitions and Interpretation: Key terms used throughout the agreement and rules of interpretation

4. The Facility: Details of the bridge facility, including amount, purpose, and availability period

5. Conditions Precedent: Conditions that must be satisfied before drawdown

6. Drawdown: Procedures and requirements for drawing down the facility

7. Interest: Interest rates, calculation periods, and payment dates, including step-up provisions

8. Repayment and Prepayment: Terms for repayment, mandatory prepayment events, and voluntary prepayment rights

9. Tax Gross Up and Indemnities: Provisions for tax-related payments and indemnities

10. Increased Costs: Provisions dealing with increased costs to the lender

11. Representations and Warranties: Statements of fact and assurances given by the borrower

12. Information Undertakings: Obligations to provide financial and other information

13. General Undertakings: Positive and negative covenants of the borrower

14. Events of Default: Circumstances constituting default and consequences

15. Changes to Parties: Provisions regarding assignments and transfers

16. Administration: Administrative provisions including payments and calculations

17. Governing Law and Enforcement: Choice of law and jurisdiction provisions