Mr. Thomas Nelson, Branch Manager of Regional Bank Ltd to which you are employed as a Junior Loans Officer, has asked you to draft an Offer Letter/ Commitment Letter to ReadyParts Ltd. That company has been approved for credit as set out
below. At a minimum, your letter should take into account the items listed below together with the covenants attendant
on a credit of this nature.
ReadyParts Ltd, is a new Auto Spare shop being established and owned by Mr. Neil Malcolm and her husband Simon. The
company has been approved for credit of $19.000,000 broken down as follows:
Demand loan - $12,500,000 at an interest rate of 148 per annum amortised over 60 months at a monthly payment of
$290,853.14. (Payment due date is one month after disbursement and disbursement is to be decided by you).
Overdraft - $6,500,000 given at a rate of prime plus 38. The prime rate is currently 11.58 but this can be adjusted depending
on money market conditions.
Shop numbered 17 at 64 Ever Spring Road, is owned by the company on a free-hold basis and has no fen. It is valued at
$21,000,000 and the bank's policy allows up to $14.000,000 to be accepted as collateral security on properties of this
noture: Mrs: Malcolm owns a 201 5 Mercedes Benz motor car with chassis numbered 9843524 and valued at $7.000,000. The
bank's policy will allow it to be charged at $3,500.000. Mr. Malcolm's brother, Dwight Lewis, has a fixed deposit account in
Regional Bank with a balance of $3,000,000 of which he has offered to pledge $1.500.000 as security for the credit facilities.
A commitment fee of one and a half percent (1.596) of the total facility will be charged and receipt of loan payments after
8 days past the due date will ottract a fee of 1.20% per month of the payment due. Stamping and registration fee of
$30,000 for all the security documentation has been pre- approved by the relevant government
departments.