Bifurcated unitranche vs 1L/2L

Because both FO and LO are technically invested in the same piece of debt, they are counted as pari passu in payment order but only different in waterfall. Hence, compared to a traditional 1L/2L where the payments are made separate, one payment is made for the unitranche facility altogether. Theoretically, if there aren't cross-default covenants, then in the case of a traditional 1L/2L the borrower could default on the coupon of the 2L without affecting the 1L, whereas you can't do that with the unitranche. What this also means is that the FO and LO will always mature at the same time, whereas with 1L/2L you can have different maturities.

i'll answer the rest another time, some less important tthan others.

3. "Prepayment Premium" /  Call protection  - explanation

• Term Loan A - no penalty
• 1st lien TLB - 101 soft call only in repricings for 6 months
• 2nd lien TLB - 102, 101
• Unitranche - 102, 101 (minimum), often heavier prepayment penalties
• Example: NC1, 104, 103, 102, 101 (Non-call - 0 to year 1, 4% fee - Y1-2, 3%, 2%, 1%)

see language below -n after NC1, as part of definition of:

"Prepayment Premium"

• (ii) if such Prepayment Event occurs on or after the 12-month anniversary of the Closing Date but prior to the date that is 24 months after the Closing Date, a prepayment premium equal to 4.00% of the outstanding Loan Amount subject to the Prepayment Event;
• (iii) if such Prepayment Event occurs on or after the 24-month anniversary of the Closing Date but prior to the date that is 36 months after the Closing Date, a prepayment premium equal to 3.00% of the outstanding Loan Amount subject to the Prepayment Event;
• (iv) if such Prepayment Event occurs on or after the 36-month anniversary of the Closing Date but prior to the date that is 48 months after the Closing Date, a prepayment premium equal to 2.00% of the outstanding Loan Amount subject to the Prepayment Event; and
• (v) if such Prepayment Event occurs on or after the 48-month anniversary of the Closing Date, a prepayment premium equal to 1.00% of the outstanding Loan Amount subject to the Prepayment Event (such amounts described in clauses (ii), (iii), (iv) and (v) are herein referred to as the “Repayment Premium”).

#6 HPS / Ares / Comvest - yes. they do  non-sponsor

Ares:

• "Ability to Commit $500mm+in a single transaction"
• 13% of portfolio to non-sponsored companies"

5. Financial Covenants (step-downs)

Example below

(b) Leverage Ratio. Maintain as of the end of each fiscal quarter, a ratio (the "Leverage Ratio") of Funded Debt, calculated as of such date, to
EBITDA, measured for the period of four fiscal quarters then ended, of not greater than the ratios set forth below for the applicable fiscal quarter then
ending:

Fiscal Quarter Ending /  Maximum Leverage Ratio
March 31, 2017 and June 30, 2017 5.00 to 1.00
September 30, 2017 and December 31, 2017 4.75 to 1.00
March 31, 2018 through and includingDecember 31, 2018 4.00 to 1.00
March 31, 2019 through and including December 31, 2019 3.50 to 1.00
March 31, 2020 through and including December 31, 2020 3.00 to 1.00
March 31, 2021 and each fiscal quarter thereafter 2.85 to 1.00

Uniranche vs. 1L/2L

• -limited # of parties
• larger DDTLs - important for borrowers with tuck-in acquisition strategy

• -no intercreditor complexity (AAL)
• -higher WA cost of debt than 1L/2L (often) - varies tho
• -limited investor base
• -not as receptive to repricing compared to syndicated 1L
• harder to get cov-lite structure
• tenor: 5yr vs. 1L 7yr
• Ratings - 1L  TLB / 2L -- need ratings (CLOs - largest investor, need a rating).
• Non-rated deals - typically add a premium to pricing of ~50-75 bps for NR/NR, altho depends on deal (illiquid, smaller investor universe). 
• 1L / 2L - slightly more ardous execution process - syndication requires creating Lender Pres, CIM, and RAP if rated. 

DDTLs w/ Direct Lenders:

• While direct lenders are particularly sensitive to the terms under which additional debt may be incurred, they are, especially for borrowers with an acquisitive investment thesis, often willing to provide significant committed post-closing incremental financing in the form of delayed draw term loan commitments. While this feature is available in the BSL market, the conditions are typically more restrictive – for example, limited to funding specifically identified acquisitions that are scheduled to close within a relatively short period (typically six to 12 months following the initial funding) – and it is still generally disfavoured by institutional lenders seeking the yield certainty of fully funded investments.

Selected Challenges of Direct Lending

1) Revolvers - fund on short term notice

• a borrower’s desire for flexible and readily accessible revolving credit and letters of credit. This ability has long been a mainstay and competitive strength of commercial banks, and while many direct lenders have made strides in providing this critical function, it still represents a challenge to their ability to compete in this part of the financing market. In particular, direct lenders historically – and, in certain cases, still – fund borrowings by calling capital from their investors and/or borrowing under fund-level credit facilities. The time it takes for lenders to do so, however, may be inconsistent with a borrower’s desire for funding on short notice. More recently, direct lenders have attempted to mitigate this disadvantage by restructuring their balance sheets to ensure that cash is available in order to make revolving loans on short notice and finding creative ways to issue letters of credit, either directly or through an arrangement with an acceptable third  party provider.