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Facility Agreement Template for Indonesia

A comprehensive financing agreement governed by Indonesian law that establishes the terms and conditions for extending credit facilities between lenders and borrowers. The document incorporates requirements under Indonesian banking regulations, the Civil Code, and relevant financial services laws, including OJK (Financial Services Authority) requirements. It details the facility amount, interest rates, repayment terms, security arrangements, representations and warranties, covenants, and events of default, while ensuring compliance with local currency regulations and mandatory use of Bahasa Indonesia for agreements with Indonesian parties.

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What is a Facility Agreement?

The Facility Agreement serves as the primary document for documenting loan arrangements in Indonesia, whether for corporate financing, project finance, or general working capital purposes. This agreement type must comply with Indonesian banking regulations, including Law No. 7 of 1992 on Banking (as amended) and OJK regulations. The document typically details the facility structure, drawdown mechanics, security package (if applicable), and ongoing obligations of the parties. For agreements involving Indonesian parties, it must be executed in Bahasa Indonesia, or in a dual language format, to comply with Law No. 24 of 2009. The Facility Agreement needs to account for specific Indonesian law requirements regarding security interests, currency controls, and mandatory governing law provisions for certain types of agreements involving Indonesian parties.

What sections should be included in a Facility Agreement?

1. Parties: Identification of the lender(s), borrower(s), and any other parties to the agreement

2. Background: Context of the facility and purpose of the loan

3. Definitions and Interpretation: Definitions of key terms and interpretation rules

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

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

6. Drawdown: Procedures and requirements for utilization of the facility

7. Interest: Interest rate, calculation periods, and payment provisions

8. Repayment: Terms and schedule for repayment of the facility

9. Prepayment: Voluntary and mandatory prepayment provisions

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

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

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

13. Events of Default: Circumstances constituting default and consequences

14. Changes to Parties: Rules for assignments and transfers

15. Payment Mechanics: Payment procedures, currency, and set-off rights

16. Costs and Expenses: Allocation of transaction costs and ongoing expenses

17. Indemnities: Protections and indemnifications for the lender

18. Notices: Communication procedures between parties

19. Calculations and Certificates: Rules for calculations and evidential value of certificates

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

What sections are optional to include in a Facility Agreement?

1. Security: Required for secured facilities, detailing security package and enforcement rights

2. Guarantee: Required when guarantors are party to the agreement

3. Agent and Security Agent Provisions: Required for syndicated facilities with an agent structure

4. Majority Lenders: Required for syndicated facilities, defining voting rights and decision-making

5. Tax Gross Up and Indemnities: Detailed tax provisions if cross-border elements exist

6. Increased Costs: Protection for lenders against regulatory changes, often in international facilities

7. Currency Provisions: Required for multi-currency facilities

8. Bank Accounts: Required when specific account structures or cash management systems are needed

9. Subordination: Required when there are multiple creditors requiring ranking of claims

What schedules should be included in a Facility Agreement?

1. Conditions Precedent: Detailed list of required documents and conditions

2. Form of Drawdown Request: Template for utilization requests

3. Form of Transfer Certificate: Template for transferring commitments between lenders

4. Repayment Schedule: Detailed amortization schedule if applicable

5. Form of Compliance Certificate: Template for periodic compliance certification

6. Lender Commitments: List of lenders and their commitments (for syndicated facilities)

7. Security Documents: List and copies of security documents

8. Financial Covenants: Detailed financial covenant calculations and definitions

9. Form of Accession Deed: Template for additional parties joining the agreement

10. Form of Assignment Agreement: Template for assigning rights under the agreement

Authors

Alex Denne

Advisor @ GenieAI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Indonesia

Publisher

GenieAI

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use

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