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The Loan Against Letter of Credit agreement is a specialized financing instrument used when a company requires working capital or trade financing based on an existing Letter of Credit. This document type is particularly relevant in Indonesia's robust international trade sector, where businesses frequently engage in import/export activities. The agreement details the loan facility, security arrangements, drawdown procedures, and repayment terms, while ensuring compliance with Indonesian banking regulations and international trade practices. It includes specific provisions required by Bank Indonesia and OJK regulations, particularly regarding foreign exchange transactions and credit facility assessments. The document is essential for businesses seeking to optimize their working capital cycle by obtaining financing against their Letter of Credit before receiving payment from the ultimate buyer.

1. Parties: Identification of the lender (bank) and borrower, including their complete legal names, registration numbers, and addresses

2. Background: Context of the loan facility, reference to the underlying Letter of Credit, and purpose of the agreement

3. Definitions: Definitions of key terms used throughout the agreement, including banking, Letter of Credit, and financial terms

4. Facility Details: Specific details of the loan facility including amount, currency, purpose, and relationship to the Letter of Credit

5. Conditions Precedent: Conditions that must be satisfied before the loan facility becomes available

6. Letter of Credit Requirements: Specifications regarding the Letter of Credit, including issuing bank requirements, format, and validity

7. Drawdown Procedures: Process and requirements for drawing down the loan facility

8. Interest and Fees: Interest rate, calculation method, payment dates, and applicable fees

9. Repayment Terms: Repayment schedule, method, and currency of repayment

10. Security and Assignment: Details of security arrangements, including assignment of Letter of Credit proceeds

11. Representations and Warranties: Standard and specific representations and warranties from the borrower

12. Covenants: Positive and negative obligations of the borrower during the facility period

13. Events of Default: Circumstances constituting default and consequences thereof

14. Termination: Circumstances and procedures for termination of the facility

15. Governing Law and Jurisdiction: Specification of Indonesian law as governing law and jurisdiction for disputes