What is a Confidential Information Memorandum?

A Confidential Information Memorandum is put together by a lead bank for a corporate credit facility when they wish to invite other banks to participate in the facility. Typically these memorandums tell you about the company seeking credit, why they want the credit, what it will be used for and how they intend on paying the money back. One thing needs to be kept in mind when reading one of these documents, and that is that the lead bank has put it together and they will describe the company/deal in its best possible light as they want other banks to buy.

Banks often look for suiters for a credit facility that they don't want to assume all the risk on. Part of the information they organize is the Corporate Information Memorandum. For example Company A wants $100 million and Bank A likes the company/owners/business etc and feels they could service $100 million. Bank A doesn't want to be the sole lender of the $100 million so they look for other banks to lend a portion say $40 million leaving Bank A's exposure at $60 million.