Debenture Loan Agreement Template for Saudi Arabia

The Debenture Loan Agreement is a critical document used in Saudi Arabian financing transactions where a borrower seeks to obtain funding through the issuance of debentures while providing security over its assets. This document is particularly relevant for corporate borrowers seeking to raise significant capital while offering security to their lenders. The agreement must carefully balance international financing practices with local regulatory requirements, including compliance with Saudi Arabian banking laws, capital market regulations, and most importantly, Shariah principles. It contains detailed provisions regarding the security structure, profit calculation mechanisms (rather than conventional interest), enforcement rights, and the specific requirements for creating and perfecting security interests under Saudi law. The document is typically used in large corporate financing transactions, project finance, or major corporate expansions where substantial secured funding is required.

1. Parties: Identification of the lender(s), borrower(s), and any security trustees or agents

2. Background: Context of the financing arrangement and confirmation of Shariah compliance

3. Definitions and Interpretation: Key terms, including Arabic legal and financial terms, and interpretation principles

4. The Facility: Nature and amount of the facility, purpose, and Shariah-compliant profit structure

5. Security: Creation and terms of the debenture security over assets

6. Secured Assets: Detailed description of assets subject to the security

7. Perfection and Further Assurance: Requirements for perfecting security under Saudi law

8. Representations and Warranties: Standard and Saudi-specific representations including Shariah compliance

9. Covenants: Positive and negative obligations of the security provider

10. Enforcement: Rights and remedies upon default, compliant with Saudi enforcement law

11. Power of Attorney: Appointment of security agent/trustee as attorney for enforcement

12. Changes to Parties: Transfer and assignment provisions

13. Payment Provisions: Payment mechanics and profit calculation methods

14. Administration: Administrative provisions including notices and calculations

15. Governing Law and Jurisdiction: Saudi law as governing law and jurisdiction provisions