The Non Recourse Loan Agreement is a sophisticated financing instrument used in South African transactions where lenders agree to look solely to specific assets for loan repayment, rather than the borrower's other assets or cash flows. This document type is particularly relevant for project finance, asset finance, and real estate transactions where the financed assets generate their own revenue streams. The agreement must comply with South African legislation, particularly the National Credit Act, Companies Act, and Financial Intelligence Centre Act. It typically includes detailed provisions on asset monitoring, maintenance requirements, cash flow management, and enforcement procedures specific to the collateral. This structure is favored in situations where parties wish to ring-fence assets and associated liabilities, often used in large-scale infrastructure projects, property developments, or specialized asset financing.
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1. Parties: Identification of the Lender and Borrower with their full legal details
2. Background: Context of the loan agreement and description of the collateral asset(s)
3. Definitions and Interpretation: Key terms used throughout the agreement and rules of interpretation
4. The Facility: Details of the loan amount, purpose, and drawdown conditions
5. Limited Recourse Nature: Explicit provisions limiting the lender's recourse to specified collateral
6. Security: Details of the collateral and security arrangements
7. Interest and Fees: Interest rate, calculation method, and applicable fees
8. Repayment Terms: Repayment schedule, prepayment provisions, and payment mechanics
9. Representations and Warranties: Statements of fact and assurances from the Borrower
10. Covenants: Ongoing obligations of the Borrower, particularly regarding the collateral
11. Events of Default: Circumstances constituting default and enforcement rights
12. Boilerplate Provisions: Standard legal provisions including notices, amendments, governing law
1. Conditions Precedent: Pre-disbursement requirements, used for more complex transactions
2. Tax Provisions: Detailed tax arrangements, needed when tax implications are significant
3. Asset Management: Provisions regarding maintenance and operation of collateral assets, relevant for complex asset-based financing
4. Insurance: Required insurance coverage for collateral, important for high-value assets
5. Environmental Provisions: Environmental compliance requirements, necessary when collateral involves real estate or industrial assets
6. Inter-creditor Provisions: Used when multiple lenders are involved in the financing structure
1. Loan Terms Schedule: Detailed financial terms including loan amount, interest rate, and payment dates
2. Collateral Description: Detailed description and valuation of the assets serving as collateral
3. Form of Drawdown Notice: Template for requesting loan disbursements
4. Repayment Schedule: Detailed amortization schedule if applicable
5. Security Documents: Forms of security agreements, pledges, or mortgages
6. Conditions Precedent Checklist: List of required documents and conditions for loan effectiveness
Relevant legal definitions
Account Bank
Applicable Law
Asset
Asset Documents
Asset Value
Authorisation
Available Facility
Business Day
Collateral
Condition Precedent
Default
Default Interest
Default Rate
Drawdown
Drawdown Date
Drawdown Notice
Enforcement Event
Event of Default
Facility
Facility Agent
Finance Documents
Financial Indebtedness
Insurance
Insurance Proceeds
Interest Payment Date
Interest Period
Interest Rate
Legal Reservations
Lender
Loan
Material Adverse Effect
Maturity Date
Operating Account
Payment Date
Permitted Encumbrance
Potential Default
Prepayment Amount
Principal Outstanding
Project
Project Documents
Recourse Assets
Recourse Limitation
Relevant Jurisdiction
Repayment Date
Repayment Schedule
Required Insurance
Security
Security Agent
Security Documents
Security Interest
Tax
Transaction Documents
Valuation
Valuation Report
Applicable Law
Asset
Asset Documents
Asset Value
Authorisation
Available Facility
Business Day
Collateral
Condition Precedent
Default
Default Interest
Default Rate
Drawdown
Drawdown Date
Drawdown Notice
Enforcement Event
Event of Default
Facility
Facility Agent
Finance Documents
Financial Indebtedness
Insurance
Insurance Proceeds
Interest Payment Date
Interest Period
Interest Rate
Legal Reservations
Lender
Loan
Material Adverse Effect
Maturity Date
Operating Account
Payment Date
Permitted Encumbrance
Potential Default
Prepayment Amount
Principal Outstanding
Project
Project Documents
Recourse Assets
Recourse Limitation
Relevant Jurisdiction
Repayment Date
Repayment Schedule
Required Insurance
Security
Security Agent
Security Documents
Security Interest
Tax
Transaction Documents
Valuation
Valuation Report
Clauses
Interpretation
Facility Terms
Limited Recourse
Drawdown
Interest
Repayment
Prepayment
Security
Conditions Precedent
Representations and Warranties
Covenants
Asset Maintenance
Insurance
Events of Default
Enforcement
Cash Waterfall
Tax
Increased Costs
Set-Off
Assignment and Transfer
Information Undertakings
Notices
Amendments and Waivers
Severability
Counterparts
Governing Law
Jurisdiction
Service of Process
Waiver of Immunity
Entire Agreement
Confidentiality
Force Majeure
Anti-Money Laundering
Sanctions Compliance
Facility Terms
Limited Recourse
Drawdown
Interest
Repayment
Prepayment
Security
Conditions Precedent
Representations and Warranties
Covenants
Asset Maintenance
Insurance
Events of Default
Enforcement
Cash Waterfall
Tax
Increased Costs
Set-Off
Assignment and Transfer
Information Undertakings
Notices
Amendments and Waivers
Severability
Counterparts
Governing Law
Jurisdiction
Service of Process
Waiver of Immunity
Entire Agreement
Confidentiality
Force Majeure
Anti-Money Laundering
Sanctions Compliance
Relevant Industries
Real Estate
Mining
Infrastructure
Renewable Energy
Aviation
Shipping
Commercial Property
Manufacturing
Project Finance
Asset Finance
Relevant Teams
Legal
Finance
Treasury
Risk Management
Compliance
Credit
Commercial
Project Finance
Asset Management
Investment
Relevant Roles
Chief Financial Officer
Finance Director
Legal Counsel
Corporate Lawyer
Finance Manager
Credit Manager
Risk Manager
Project Finance Manager
Asset Manager
Treasury Manager
Compliance Officer
Commercial Director
Investment Manager
Portfolio Manager
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