Banc Star Financial advises investors on utilizing senior debt financing to raise capital for both traditional and unique strategic purposes, including raising capital to finance mergers, and for structuring leveraged buyouts (LBO). Our debt consultants begin debt financing services with an analysis of the benefits and drawbacks that a client will realize when negotiating and incorporating a senior debt tranche into the client’s capital structure. We work to achieve the optimum interest rates and other terms in view of debt loan ratings that can range from investment grade to non-investment high-yield. Most senior debt is amortized over a five- to ten-year period. Our analysis is not locked into this norm, and we frequently structure debt with longer and shorter amortization periods and preferable rates of return as compared to other debt in a client’s overall capital structure.
Senior debt loans are frequently structured in multiple tranches, with earlier tranches being paid off through amortization. Our extensive international network and position in the investment and merchant banking industries enables us to quickly place the earlier amortized tranches with commercial banking organizations, and the later non-amortized tranches with hedge funds, ETFs, and other private fund organizations.
Banc Star Financial’s Approach to Senior Corporate Debt Terms and Conditions
Senior debt loans reflect the tension between a corporate entity’s financing needs and the terms and conditions that the market will demand when participating in that senior debt financing. We offer optimum debt/cash flow ratios, and variable interest priced at a standard international index rate plus a certain number of basis points.
Our clients benefit from our expertise with senior corporate debt loans that are a function of:
- the client’s tangible and intangible collateral, historical cash flows, and future growth prospects;
- securitized borrowing with favorable interest rates;
- regular payments with amortization, or an option for balloon repayments;
- fullest control over assets with reduced influence from senior lenders;
- lower interest rates that are driven by our market relationships with commercial and investment banks;
- floating rate coupons that enable a corporate borrower to manage payments when interest rates are increasing;
- loan structures that mitigate inflation risks;
- lower price volatility that transfers down to the client’s bottom line.
Notwithstanding the benefits that we can help our corporate clients to realize with senior debt financing, our debt advisors remain cognizant of the risks that can lead to defaults and the loss of assets that are used to secure senior debt. We work closely with managers and creditors to verify clients’ viability to support repayment of interest and principal of senior loans.
