Structuring Term Loan B Transactions: Combining High Yield Financing With Conventional Bank Loans

A TLB is a term loan which has minimal amortization and a balloon payment of principal at maturity.

TLBs offer borrowers another level of financing with fewer covenants than TLAs. TLAs usually have traditional bank covenant protection, including financial covenants and prohibitions on acquisitions and other debt. The TLB structure provides flexibility with payments and investments, the incurrence of additional debt, and acquisitions.

Listen as our authoritative panel discusses the critical terms of TLBs, and how to structure TLBs in combination with TLAs. The panel will also discuss new approaches to using TLBs in escrow in connection with acquisition financing.

1. General characteristics of Term Loan B—term, amortization, balloon occurring after payoff of Term Loan A
2. Term Loan B covenants vs. Term Loan A covenants
3. Prepayment issues: Call protection
4. Use of TLBs in escrow arrangements

The panel will review these and other key issues:

• Standard structure and terms of TLBs including incremental debt and call protection
• What are the “covenant-lite” provisions typically found in TLB documents, and how do they vary from conventional TLA covenants?
• Revolving facilities and TLBs including springing covenants
• Waterfall and subordination structuring with TLBs including TLAs, Unitranche and 1st and 2nd Lien structures
• How might a TLB be employed in escrow in an acquisition financing?