. Unitranche Debt: A Loan That Combines Funding From Multiple Parties
What is an agreement among lenders?
An agreement among lenders is a formal, written agreement that outlines the terms and conditions of a loan. This agreement is between the borrower and the lender, and it is signed by both parties. The agreement will detail the amount of the loan, the interest rate, the repayment schedule, and any other terms and conditions that the parties have agreed to. What is unitranche facility? A unitranche facility is a type of debt financing that combines features of both term loans and revolver loans. It is typically used by middle-market companies.
Unitranche facilities are usually provided by a syndicate of banks, with one bank acting as the lead arranger. The lead arranger provides a single loan that covers both the revolver and term loan portions of the facility. This simplifies the borrowing process for the borrower, as they only have to deal with one lender.
Unitranche facilities typically have a term of 3-5 years and an interest rate that is a spread over a benchmark rate, such as LIBOR. The interest rate on a unitranche facility is usually lower than the interest rate on a revolver loan, as the borrower is taking on less risk.
Unitranche facilities can be used for a variety of purposes, such as working capital, acquisitions, or refinancing existing debt. What are the differences between senior debt unitranche and mezzanine? Unitranche debt is a type of senior debt that is provided by a single lender, typically a bank, and that is not syndicated. Unitranche debt usually has a higher interest rate than syndicated senior debt, but it is typically cheaper and easier to obtain than mezzanine debt.
Mezzanine debt is a type of subordinated debt that is typically provided by institutional investors such as private equity firms or hedge funds. Mezzanine debt typically has a lower interest rate than unitranche debt, but it is more expensive and more difficult to obtain.
What is the difference between term loan A and B?
Term loan A is a type of corporate debt that is typically used to finance the purchase of large assets or for working capital. Term loan B, on the other hand, is a type of corporate debt that is typically used to finance the expansion of a business or for other short-term capital needs.
What is stretching accounts payable?
Stretching accounts payable is a common tactic used by businesses to improve their cash flow. By delaying payments to suppliers, businesses can free up cash in the short-term to invest in other areas or meet other obligations. This can be a risky strategy, however, as it can damage relationships with suppliers and lead to late payment fees or other penalties.