The senior facility agreement

Senior debt facilities may be provided by banks or institutional investors. Senior facilities often comprise two main components:

• • term facilities (which will be applied towards the purchase); and
• • a revolving working capital facility (for general corporate purposes).

Other possible senior facilities include:

• • a capex facility, which may be provided to help the group fund its growth capital expenditure plans; or
• • a further acquisition facility, which may be provided where the business intends to grow by making acquisitions (a well-known approach where an industry is ripe for consolidation or the business needs to achieve critical mass and/or market share to facilitate an exit strategy, is to follow a “roll up” strategy where similar businesses are acquired and ”rolled up” into the whole).

This guidance note outlines the senior facilities mentioned above.

See The senior facility agreement.