Senior financing is generally made available Telephone Number List from banks, although privately placed notes to institutional investors are also possible, or a public issue of bonds or stocks is on occasion the source of senior debt. Revolving Telephone Number List Line of Credit: o One component of senior debt is almost always a revolving line of credit.
It is loaned to an MBO based on a certain Telephone Number List percentage of the appraised orderly liquidation value of the eligible accounts receivables and inventory. Such loans are further limited by the predictability of cash flow to service senior debt. A revolving line of credit typically has a term of one year with renewal provisions. The interest rate Telephone Number List ranges from the prime rate to three over prime.
Senior Term Loan: o Another Telephone Number List component of senior debt is a senior-term loan. This is a loan based on a certain percentage of the appraised fair market value of the land and buildings and the orderly liquidation value of the machinery and equipment. Such loans are further limited by the predictability of cash flow to service Telephone Number List senior debt. The term for senior term debt is typically five to eight years. The interest rate ranges from the prime rate to three over prime. Subordinated Debt: