Structuring Debt Finance : Syndicated Loans, Debt Securities And Mezzanine Loans

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Structuring Debt Finance: Syndicated Loans, Debt Securities & Mezzanine Loans by Lexis Practice Advisor Attorney Team Form and Drafting Notes Provided for Use in Lexis Practice Advisor by: Lexis Practice Advisor Team. This Ppractice Nnote addresses three types of alternatives for a company to raise debt for its business purposes: (1) syndicated loan borrowings, (2) debt securities issuances, and (3) mezzanine loan borrowings. This Npractice note will describes the basic features and differences between the alternatives. When a company is seeking to raise money for business purposes, it can turn to a number of options to achieve its goal: issuing equity, incurring debt or a combination of both. Typically, if a company goes the route…show more content…
If markets are tight, lenders may not be willing to lend to the company at interest rates that the company can afford. Companies may be restricted internally by limits of borrowing (e.g. in the company’s organizational documentation) or externally by other financing documents to which it is a party (e.g. by covenants on debt incurrence in other loan agreements or indentures to which the company is a party). The existing capital structure of a company also plays a large part in how much a company can raise through its financing options. If a company is already severely leveraged, the company’s only financing option may be to pursue an equity offering. If a company is not highly leveraged and the company’s debt ratios (i.e. the ratio of EBITDA vs. total interest costs) are in an acceptable range for lenders, a company will be better positioned to obtain debt financing. Debt Financing in General Companies accessing the debt financing markets raise money by borrowing from a lender, creditor or investor with a promise of repayment of the funds with interest at the end of the loan’s term. The structure of the debt financing will vary depending on certain characteristics of the company, including its creditworthiness, the security package that it is offering and its overall size, as well as various other factors, including capital availability and the amount of funds that the company will require. Debt

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