TABLE OF CONTENTS As a first step in the syndications sales cycle, the agent bank together with the project sponsors will prepare an offering memorandum (also known as an information memorandum). This occurs in the early phases of the loan syndication, as depicted in the syndication timeline shown in Figure 3.1.
Here, we look at the information memorandum as a sales/information tool. Most potential participants in a syndicated loan are expected to exercise prudent credit judgement by undertaking their own credit analysis. The process of credit analysis does not concern us here, we only note that there is a standard approach to assessing lending risks which typically includes obtaining information such as certificates of incorporation, authorized signatories, annual reports, auditor s certificates, etc. In the case of syndicated loans, the agent typically obtains this information from the borrower.
In any project finance transaction there are elements that fall outside the scope of traditional frameworks and checklists. This is particularly the case in transactions of a unique nature such as aircraft leasing or project financing. This could include information to supplement the traditional sources of credit information such as maps of the oil fields in question, estimated demand for oil, forecasted oil prices and various tables quantifying this. In other words, information relating to the specifics of the project being financed as opposed to the borrower s financial condition.
The purpose of the memorandum is to explain the project to potential lenders, including topics such as: experience of...
