Prepayment of Term Loans, RCF
Hello all,
Working at a growth equity shop with limited debt experience and am trying to figure out an acquisition financing prepayment clause which states that proceeds (from asset sales) shall be used in the following order: reduction of outstanding term loans, reduction of outstanding RCF, and finally RCF limits.
How does the last bit (reduction of RCF limits) work? Given these are just limits from the bank and not drawn, there should not be any requirement to pay the bank cash for this - pretty sure i'm misunderstanding it, would appreciate if any monkeys can shed some light on this.
Cheers all.
U ask your MDs
Maybe downsize the revolver size since they will have more cash on hand?
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