Bridge Loan Term Sheet for New Zealand

Bridge Loan Term Sheet Template for New Zealand

A Bridge Loan Term Sheet is a preliminary document that outlines the key commercial and legal terms of a proposed bridge financing arrangement under New Zealand law. It serves as the foundation for the subsequent detailed loan documentation, setting out essential elements such as loan amount, interest rate, tenure, security structure, and key conditions. While typically non-binding (except for certain provisions like confidentiality), it represents the parties' intentions and forms the basis for the preparation of final loan documentation. The document incorporates specific requirements under New Zealand financial services legislation and local market practice.

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What is a Bridge Loan Term Sheet?

The Bridge Loan Term Sheet is a crucial document used in New Zealand financing transactions where temporary or interim funding is required pending a more permanent financing solution. It is commonly employed in situations such as property acquisitions, corporate restructuring, or project development where timing gaps exist between funding needs and long-term financing availability. The document provides a structured framework for negotiating and documenting the essential terms of the bridge facility, ensuring compliance with New Zealand regulatory requirements including the Credit Contracts and Consumer Finance Act 2003, Financial Markets Conduct Act 2013, and relevant banking regulations. The term sheet serves as a roadmap for legal counsel to prepare detailed facility documentation and helps all parties clearly understand their rights and obligations under the proposed financing arrangement.

What sections should be included in a Bridge Loan Term Sheet?

1. Parties: Identification of the Lender(s) and Borrower(s), including registration numbers and addresses

2. Background: Brief context of the bridge financing requirement and purpose of the loan

3. Definitions: Key terms used throughout the term sheet

4. Facility Details: Loan amount, type, and purpose

5. Interest and Fees: Interest rate, calculation method, arrangement fees, and other applicable fees

6. Availability and Term: Drawdown period, loan tenure, and repayment date

7. Repayment Terms: Repayment schedule, prepayment provisions, and mandatory prepayment events

8. Security Structure: Overview of security package and guarantees required

9. Conditions Precedent: Key conditions to be satisfied before drawdown

10. Key Undertakings: Essential covenants and obligations of the borrower

11. Events of Default: Standard and transaction-specific events of default

12. Governing Law: Confirmation of New Zealand law as governing law

What sections are optional to include in a Bridge Loan Term Sheet?

1. Financial Covenants: Specific financial ratios and tests - include when lending to corporate entities or where financial performance monitoring is required

2. Security Trustee Provisions: Include when there are multiple lenders requiring a security trustee arrangement

3. Intercreditor Provisions: Include when there are multiple creditors requiring subordination or ranking of security interests

4. Hedging Requirements: Include when interest rate or currency hedging is required

5. Construction Drawdown: Include for property development bridge loans with staged drawdown requirements

6. Conversion Rights: Include when the bridge loan has potential conversion features to equity or other instruments

7. Syndication Provisions: Include when the loan may be syndicated to other lenders

What schedules should be included in a Bridge Loan Term Sheet?

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

2. Schedule 2 - Conditions Precedent Checklist: Detailed list of all required conditions precedent documents and confirmations

3. Schedule 3 - Security Package Details: Comprehensive list of all security documents and perfection requirements

4. Schedule 4 - Fee Schedule: Detailed breakdown of all applicable fees and charges

5. Schedule 5 - Financial Covenant Calculations: Formulae and definitions for financial covenant calculations if applicable

6. Appendix A - Project Timeline: For property or project-related bridge loans, key milestone dates and requirements

7. Appendix B - Property Schedule: Details of property assets where relevant to security package

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

New Zealand

Publisher

Genie AI

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Real Estate Development

Construction

Infrastructure

Corporate Finance

Private Equity

Mergers and Acquisitions

Property Investment

Healthcare

Manufacturing

Retail

Technology

Agriculture

Relevant Teams

Legal

Finance

Treasury

Risk Management

Corporate Development

Investment

Credit

Compliance

Real Estate

Project Finance

Corporate Banking

Debt Advisory

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Corporate Lawyer

Banking Lawyer

Finance Manager

Investment Director

Real Estate Director

Project Finance Manager

Risk Manager

Relationship Manager

Credit Analyst

Investment Banker

Corporate Banking Manager

Debt Advisory Director

Industries
Credit Contracts and Consumer Finance Act 2003: Regulates credit contracts, consumer leases, and buy-back transactions. Essential for ensuring the loan terms comply with consumer protection requirements and disclosure obligations.
Property Law Act 2007: Governs property transactions and security interests in property, relevant for any property-secured bridge loans and enforcement rights.
Contract and Commercial Law Act 2017: Provides the fundamental legal framework for contract formation, enforcement, and remedies in New Zealand.
Personal Property Securities Act 1999: Regulates security interests in personal property, crucial for registering security interests and determining priority of claims.
Financial Service Providers (Registration and Dispute Resolution) Act 2008: Requires registration of financial service providers and membership in dispute resolution schemes.
Anti-Money Laundering and Countering Financing of Terrorism Act 2009: Imposes obligations for customer due diligence and transaction monitoring on financial institutions.
Privacy Act 2020: Governs the collection, use, and disclosure of personal information, relevant for borrower information handling and credit checks.
Fair Trading Act 1986: Prohibits misleading and deceptive conduct in trade, ensuring transparency in loan terms and conditions.
Financial Markets Conduct Act 2013: Regulates financial products and services, may be relevant if the bridge loan involves multiple investors or is structured as a financial product.
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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