Table of Contents
Senior Secured Notes means secured or unsecured notes or other debt of the Company issued after the Closing Date, and the Indebtedness represented thereby; provided that (a) the terms of which do not provide for any scheduled repayment, mandatory redemption or sinking fund obligations prior to the Latest Maturity Date.
Why would a company offer senior secured notes?
A senior note is a type of bond that gives an investor a higher-priority claim compared to junior notes when a company files bankruptcy. Senior notes pay lower interest rates than junior notes but are repaid before other debts when a company defaults.
What does it mean when a company offers senior notes?
Senior Debt, or a Senior Note, is money owed by a company that has first claims on the company’s cash flows. It means the lender is granted a first lien claim on the company’s property, plant, or equipment. PP&E is impacted by Capex, in the event that the company fails to fulfill its repayment obligations.
Are senior notes a good investment?
Investors of senior convertible notes benefit from the option to convert their notes into shares of the issuing company and from a priority for recourse if the issuing company goes bankrupt. Since senior convertible notes have more benefits than convertible notes, they also pay a lower interest rate.
Are senior notes good or bad?
Senior debt is a low-risk sort of loan. They won’t let you have money without having collateral to back up that loan. This typically involves assets of the business itself. With that in mind, you’re taking a risk to borrow that money, and should only do so if you’re reasonably sure you’ll be able to pay it back.
Are senior secured notes first lien?
Senior debt is often secured by collateral on which the lender has put in place a first lien. Usually this covers all the assets of a corporation and is often used for revolving credit lines. It is the debt that has priority for repayment in a liquidation.
Is revolving credit facility senior debt?
Revolving credit facility (revolver), which can be paid down and reborrowed as needed. – Term debt (senior and subordinated) with floating rates. Payments-in-kind (PIK) toggle allows no interest payment and increase in principal.
What is a senior secured debt?
Senior secured loans are debt obligations generally issued by non-investment grade businesses. These loans are usually “secured” by a company’s assets, and are typically used to fund a company’s growth or cover general operating expenses.
What does it mean when a company offers notes?
A note offering is basically an offer to sell debt securities for a promise to pay back the principal at a later date, and most likely interest payments during yearly intervals. A note is a formal contract to repay borrowed money with interest at fixed intervals (ex semi annual, annual, sometimes monthly).
What is Senior Secured bond?
The term senior secured means that a bond is both senior and secured in its structure. A bond can also be senior but unsecured, meaning there is no specific collateral guaranteeing the bond. ARE THE ISSUERS OF SENIOR SECURED HIGH YIELD.
What is a private offering of senior notes?
Senior Note Offering means that certain private placement by Parent conducted pursuant to Section 4(2) of the Securities Act of Senior Notes for resale to “qualified institutional buyers” pursuant to Rule 144A under the Securities Act.
What happens when convertible notes convert?
Generally, convertible notes convert into shares (the “Conversion Shares”) at a qualified equity financing round (this term should be defined in the note and usually means a preferred financing round of a minimum size) at the lower of two different prices per share: (1) the price per share using the conversion cap (.
What happens to convertible note if startup fails?
When a startup fails, the company typically has run out of money. The owner of a convertible note may get nothing, or at best may only receive pennies on the dollar. You also may be able to write off your loss.
What is the interest rate on senior debt?
Many senior loans pay 6 to 9 percent interest and the PowerShares Senior Loan exchange-traded fund (ticker: BKLN), which tracks a senior loan index, yields about 3.5 percent. The 10-year U.S. Treasury bond pays about 2.8 percent.
Does senior debt get paid first?
Senior vs. Once the senior debt is completely paid back, the company then repays the subordinated debt. Thus, if a company files for bankruptcy, senior debt claims are paid first. All other debt is subordinated (junior). Collateral from asset-backed debts may be sold to pay off senior secured debt.
What is the difference between senior secured and first lien?
First lien debt holders are paid back before all other debt holders, including other senior debt holders. This makes subordinated debt more risky than senior secured debt, therefore it typically pays a higher yield.
Are bonds senior debt?
Loans and bonds can be issued as senior debt or subordinated debt. Senior debt is repaid first if the borrower encounters a default or liquidation. It is usually secured debt with collateral; however, it can also be unsecured with specific provisions for repayment seniority.
Is second lien senior debt?
These debts have a lower priority of repayment than do other, senior, or higher-ranked debt. In other words, second-lien is second in line to be fully repaid in the case of the borrower’s insolvency. Only after all senior debt, such as loans and bonds, have been satisfied can second-lien debt be paid.
What is a revolver drawdown?
It may issue more debt to make such necessary expenses. As mentioned before, the company can perform a revolver drawdown if it has insufficient cash on hand to service debt. Thus, a change in the revolver is triggered by a change in a company’s debt level.
What are secured notes?
A secured note is a type of loan or corporate bond that is backed by the borrower’s assets as a form of collateral. If a borrower defaults on a secured note, the assets pledged as collateral can be sold to repay the note. A secured note may be contrasted with unsecured notes that have no such collateral.
What is senior secured revolving credit?
Senior Secured Asset-Based Revolving Credit Facility means the credit facility provided under the Senior Secured Asset-Based Revolving Credit Agreement, including any guarantees, collateral documents, instruments and agreements executed in connection therewith, and any amendments, supplements, modifications, extensions.
