Unitranche in a Time Crunch


In a business climate where merger and acquisition activity has been uneven, and political and economic uncertainty continues to grip the United States and Europe, any additional deal certainty and cost efficiency can give private equity firms a significant advantage. Whether your firm is seeking to buy a new portfolio company, refinancing an existing credit facility or planning to take a leveraged dividend, financial decision-makers should carefully evaluate the advantages and disadvantages of a unitranche loan facility when determining how best to protect and enhance the value of their investments.

What Is a Unitranche Loan? -

Unitranche loan facilities feature a blended interest rate (calculated using the weighted average interest rates of the senior and junior debt facilities), single credit agreement, single set of security documents and their own pre-packaged version of the intercreditor agreement known as the “Agreement Among Lenders,” which specifies the priority of various lien components in a manner similar to traditional financing documents. The Agreement Among Lenders also addresses issues related to application of collateral proceeds after the exercise of remedies, control of the exercise of remedies, voting and consent rights with respect to waivers and amendments, and the rights of lenders to purchase debt of other lenders after certain triggering events.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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