This week we continue our conversation with William P. Brady, a partner in the Corporate Department of Proskauer. He is also a member of the Finance Group as well as the Multi-Tranche Finance Group. Bill is a thought leader on unitranche financings and speaks at various junior capital, multi-tranche finance and related finance conferences and seminars.

Second of two parts – View part one

The Lead Left: Amazingly, I’ve also seen mezzanine tranches being added below first-out/last-out pieces.

William Brady: Yes, that makes matters interesting. Again, each lender class carries different terms and conditions, all governed by the AAL. In some cases, we end up with multiple AALs or a combination of AAL(s) as well as a more traditional intercreditor agreement.

For companies with significant working capital assets, a split collateral unitranche may be employed. An asset-based lending (ABL) revolving credit provides financing for the receivables and inventory, and carries a first lien on those assets. And a term loan finances, and has a first lien on the other assets, taking a second lien on the current assets.