Year: 2015

Sourcing the Deals

Different companies will have various motives when deciding to pursue an acquisition, divestiture, joint venture, or strategic alliance plan. The decision is usually driven by key business fundamentals such as broader competitive product line, access to strong distribution channels or new markets, sharing of scarce talent, lower unit cost position via the elimination of common costs, economies of scale, better market positioning with a stronger brand recognition, and faster speed of entering a market versus doing a start-up. In the case of divestiture, the motivation to sell may be due to poor financial performance of the company or, if the business is a subsidiary or division, it no longer fits strategically with  the future direction  of the company.

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The documentary letter of credit (“LC”) is a key payment method in international trade – not only does it satisfy both the seller’s and the buyer’s conflicting needs, but it also is considered to be relatively risk free. However, the recent surge in financial sanctions and embargoes, and the resulting “sanctions clauses” in LCs trying to meet the issue, is challenging the fundamental nature of an LC.


Doing Due Diligence

Due diligence is used to investigate and evaluate a business opportunity. The term due diligence describes a general duty to exercise care in any transaction. As such, it spans investigation into all relevant aspects of the past, present, and predictable future of the business of a target company. Due diligence sounds impressive but ultimately it translates into basic commonsense success factors such as “thinking things through” and “doing your homework”.

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Loan Agreement – Letter of Credit Clauses

These Standard Clauses are typical provisions setting out the terms of a letter of credit facility made available to the borrower under a revolving credit loan. These Standard Clauses govern the process for requesting letters of credit and specify the borrower’s obligations to reimburse the letter of credit issuing bank for amounts drawn under the letters of credit.  They also set out the obligations of the revolving lenders to participate in outstanding letter of credit obligations if not reimbursed by the borrower. Also included are provisions requiring the borrower to post cash collateral to secure letter of credit obligations under certain circumstances, and provisions regarding letter of credit fees. These Standard Clauses have integrated notes with important explanations and drafting and negotiating tips.

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Loan Agreement – Letter of Credit Clauses

20% of the people who receive our regular letter are from the United States or Canada


If the country profile of our website traffic is an indicator, about 20% of the people who receive our regular letter are from the United States or Canada, and 40% are from the United Kingdom and Europe. The rest of our readers are from everywhere else in the world.  We do attempt to be global as well as local.   Fortunately, human character and motivation tend to be similar no matter the country or language.  And to the best of our knowledge, our readers are all members of the same species.