Letter of Comfort (Keepwell) to Bank / Financial Institution

The document titled 'Letter of Comfort (Keepwell) to Bank / Financial Institution' is a formal letter that serves as a confirmation and acknowledgment from the owner of a certain percentage of shares in a borrower company to a lender. The letter is addressed to the lender and expresses the owner's commitment to maintain their shareholding in the borrower company and to ensure that the borrower fulfills its obligations towards the lender.

 

The letter begins with the account information of the sender, including their job title and company. It is followed by the address of the account in a single line format. The main body of the letter starts with a salutation to the lender, using the term 'dear sirs/madams'. The letter then refers to a loan agreement between the lender and borrower, mentioning the agreement date.

 

In the detailed description, the letter confirms several important points. Firstly, it states that the sender is the legal and beneficial owner of a certain percentage of shares in the borrower company and has no intention to reduce or dispose of their shareholding during the term of the loan agreement. This highlights the importance of the sender's ownership and its influence on the lender's decision to enter into the loan agreement.

 

The letter also acknowledges the sender's awareness of all facilities provided or to be made available to the borrower by the lender. This demonstrates the sender's understanding of the borrower's financial arrangements with the lender. Additionally, the letter states that the sender has reviewed the loan agreement and is familiar with its terms, emphasizing their commitment to fulfilling their obligations under the agreement.

 

Furthermore, the letter includes undertakings from the sender. Firstly, the sender undertakes to continue influencing their affiliate companies, including the borrower, to meet their obligations towards lenders and other creditors. This highlights the sender's commitment to ensuring timely payment of debts by the borrower. Secondly, the sender undertakes not to dispose of any shares that would reduce their shareholding in the borrower to a minority and non-controlling position without obtaining the lender's written consent or ensuring full discharge of the borrower's liability to the lender.

 

The letter concludes with a jurisdiction clause and the sign block, which includes the account sign, job title, and account job company.

 

In summary, the 'Letter of Comfort (Keepwell) to Bank / Financial Institution' is a significant document that confirms the sender's ownership and commitment to influencing the borrower's fulfillment of its obligations towards the lender. It provides detailed information about the sender's shareholding, awareness of facilities, review of the loan agreement, and undertakings to ensure payment and shareholding stability.

How to use this document?

1. Enter the account job company and account address in a single line format.

2. Address the letter to the lender, using the term 'dear sirs/madams'.

3. Refer to the loan agreement by mentioning the agreement date.

4. Confirm the sender's legal and beneficial ownership of a certain percentage of shares in the borrower company and their commitment to maintaining the shareholding throughout the loan agreement.

5. Acknowledge the influence of the sender's ownership and participation in the borrower's management on the lender's decision to enter into the loan agreement.

6. State awareness of all facilities provided or to be made available to the borrower by the lender.

7. Express familiarity with the terms of the loan agreement after reviewing it.

8. Undertake to continue influencing affiliate companies, including the borrower, to meet their obligations towards lenders and other creditors.

9. Undertake not to dispose of shares that would reduce the sender's shareholding in the borrower to a minority and non-controlling position without obtaining the lender's written consent or ensuring full discharge of the borrower's liability to the lender.

10. Include a jurisdiction clause.

11. Sign the letter with the account sign, job title, and account job company.