Second Lien Loans

Secondary collateralized institutional loans (SCIL) are increasingly being used for recapitalization—taking out dividends or replacing more expensive mezzanine with less-expensive SCIL financing and buyout financing. SCIL on a standalone basis or in combination with mezzanine effectively lowers a company’s cost of capital.

Second lien financing can offer more flexibility than mezzanine and other junior capital solutions, while creating additional liquidity for the borrower. It is also typically viewed as a substitution for more expensive private or public mezzanine or equity-based capital.

The GE Difference

GE’s experience, underwriting knowledge, and commitment to its partners deliver significant value. A broad, deep understanding of underlying assets and enterprise values lets GE offer competitive debt structures that other players may not be able to match. It also gives our dedicated second-lien team the ability to evaluate and underwrite transactions on an asset-based loan or cash-flow basis.

Five Signs You’re Ready for a SCIL Facility
1. You already have a first lien commercial loan
2. Your company has a need for incremental capital
3. You have strong EBITDA or good assets but need additional liquidity
4. You want to avoid high-priced subordinated or mezzanine financing
5. You want to secure financing without giving up equity

Potential Applications
  •    Recapitalization
  •    M&A activity
  •    Refinancing

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