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What is the information memorandum?

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The information memorandum (info memo; [AE] bank book) is a detailed description of the borrower, its business and financial condition and the proposed transaction used by prospective lenders to assess their interest in the transaction and upon which each lender bases its decision to participate.  It is prepared and circulated by the MLA, as information memorandum agent, on the basis of information provided by the borrower during the due diligence process and agreed by the borrower and the MLA.  In an LMA leveraged facility, the parent’s active involvement in the preparation of the information memorandum is required.

It may well be a fiction that the Arranger prepared the Information Memorandum (IM) or that the Borrower approved it.  It is likely that it was not prepared at the Borrower’s request.  Many Borrowers prepare IMs themselves and give them to Finance Parties to review.

An info memo for corporate borrowers includes an executive summary and describes the facility’s nature, its purpose, terms and conditions, provides details of the borrower’s financial statements, a description of the borrower’s business, its management, an industry overview and its strategic plans.

Where a deal includes the issuance of public securities (e.g., high-yield bonds), two types of info memo are prepared.  The one variation is a public document stripped of all confidential material and incorporating only information available in the public domain, while the other is a private document for the prospective participant lenders containing detailed confidential information, which necessitates their signing of a confidentiality undertaking.

A disclaimer accompanies the information memorandum and asserts that certain information was provided by the borrower and discharges the arranger of any responsibility for its completeness or accuracy.  It also establishes that each lender is responsible for performing its own financial and economic analysis of the borrower.

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