In The News

Finance Partner Discusses Unitranche Loans in Buyouts

Practices: Finance, Credit Funds

Finance partner Joanne De Silva (New York) is quoted in an article published by Buyouts on Oct. 6 discussing non-bank lenders moving into larger unitranche deals. In the article, Ms. De Silva talks about the structure of, and reasons for turning to, unitranche loans.

“You’re dealing with a group that is signing up one credit agreement and one set of security documents without a complex inter-creditor agreement that can involve protracted negotiations,” Ms. De Silva told Buyouts. “Often the unitranche package may offer pricing advantages when compared to other structures," she said.

“People are looking for certainty and a swift closing,” Ms. De Silva explained. “When they opt for a first lien/second lien structure, they want to know that a fair amount of the inter-creditor work has been done ahead of the commitment, so they can go from signing the commitment papers to closing within a short period of time. That’s one way people have tried to make the first lien/second lien structure more competitive.”

Ms. De Silva noted that unitranche offers yet another way to build the capital stack for a business, but it won't necessarily replace other types of leveraged financing. “It's given people an additional tool,” she said. “It generally offers better pricing for lenders and can offer borrowers more certainty.”

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