Payoff Letter
(Financing Transaction)

Summary

This is a template payoff letter used to terminate a typical syndicated credit facility and release any related liens and security interests. This template includes practical guidance, drafting notes, and alternate clauses. A payoff letter is an important transaction document that serves as the primary evidence that a credit facility has been terminated and is often a prerequisite to the closing of any replacement financing. In a payoff letter, the administrative agent for an existing credit facility sets forth the outstanding principal, interest, fees and expenses that a borrower will need to pay to satisfy its loan obligations and agrees to terminate the credit facility and related collateral and guaranty arrangements once all such amounts are received. This template contemplates a financing that includes the following elements: • A senior secured credit facility with a revolving loan facility. • Agency roles for each of an administrative agent and collateral agent acting for a syndicate of lenders. • Collateral and guarantee support from the loan parties, generally including a group of the borrower's subsidiaries and the borrower's immediate parent entity. • A letter of credit sub-facility, including provisions with respect to letters of credit that will remain outstanding after the payoff (included in brackets). For a full listing of key content covering letters of credit in financing transactions, see Letter of Credit Resource Kit. For a full list of content regarding refinancing transactions, see Refinancing Resource Kit. For a full list of content regarding the closing process, see Closing Process Resource Kit. For a full list of content regarding closings of transactions, see Transaction Closings Resource Kit (Small to Mid-Sized Law). For a full list of content regarding Uniform Commercial Code transactions, see Uniform Commercial Code Resource Kit (Small to Mid-Sized Law). Read this template in conjunction with the practice notes Collateral Perfection and Release in the Closing Process and Conditions Precedent in Credit Agreements.