What an information memorandum looks like.
The information memorandum is the document a lender forms its credit view from. Most borrowers have never seen one before their first raise, so this page sets the real thing out section by section, with a specimen IM, built on a fictional borrower, to download.
The credit case, made in writing before anyone meets.
The IM is the adviser’s written case for lending to the borrower, with the model exhibits set into the page. It is issued under NDA to a controlled list of lenders and commits the borrower to nothing. The specimen carries every section of a full IM in 27 pages, where a live one runs forty to sixty. Each section is written to answer a question before the credit officer puts it.
The information memorandum, section by section.
| Section | The question it answers | What a credit officer checks |
|---|---|---|
| Executive summary and key figures | What is the credit, in brief? | That each headline figure and highlight is borne out in the sections behind it |
| The borrower, the transaction and the refinancing | What is being asked for, and what does it pay for? | That the facilities fit the uses and sources equal uses |
| Capital structure and key terms | What does the debt look like on day one? | Opening leverage against the covenant, and each facility’s pricing, amortisation, sweep and maturity |
| The business, customers and market | What drives the revenue, and is the demand durable? | That customer concentration is disclosed and the company’s position is evidenced |
| Operations and growth programme | What carries the forecast? | That the capex programme is funded and can be phased, and that no earnings are credited to it without support |
| Management and ownership | Who runs the business, and who owns it? | That the finance function can report to a lender and key-person risk is covered |
| Key credit highlights | Why lend to this business? | The evidence behind each highlight, from reorder rates to margin history |
| Trading, financial summary and quality of earnings | How good are the earnings? | That the record ties to the accounts and each add-back to covenant EBITDA is evidenced |
| Cash conversion and debt service | Can the cash pay the debt? | CFADS against interest and amortisation in each year, and how the debt falls over the plan |
| Covenant headroom and breakeven | How much room is there? | Headroom at each test date, and the EBITDA shortfall that breaks the first covenant |
| Liquidity and scenario analysis | Can the debt be serviced through a downside? | That liquidity clears the minimum in every case and the downside stays inside the covenants |
| Downside bridge and first breach | What drives the downside, and what breaks first? | Which drivers move covenant EBITDA, and whether the first breach is a covenant event or a cash event |
| Risks and mitigants | What could go wrong? | That each risk is stated plainly, with its modelled effect and mitigant |
| Process, scope and basis of preparation | What happens next, and where does each number come from? | That the timetable holds, omissions are stated and every figure traces to the model or a cited source |
Serviceability above everything, and candour about the risks.
A lender reads an IM for serviceability above everything: can the business generate the cash to pay the interest and repay the debt on schedule, through a downside as well as the plan. It reads for candour too, and prefers a borrower who found the risks first, since every risk surfaces in diligence either way.
The specimen IM, ready to read.
The specimen below is a Solon information memorandum on a fictional borrower, Northstar Components, raising a £14.6m refinancing and growth facility. No real company, no live mandate, and nothing in it is an offer or advice. Read it the way a credit officer would: start with the executive summary and the funding ask, then test whether every question it raises is answered somewhere in the document.
Want this for your own business? Solon prepares this pack for the borrower, and the first conversation is confidential.
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