Debt Advisory - College Merger Finance

Merger Finance - Further Education Colleges
Many Colleges are actively engaged in this major development in the FE sector. 

One of the most important aspects of any merger is consideration as to the debt obligations of each college, and the on-going borrowing requirement of the enlarged entity. It is therefore necessary to engage with each college's lending bank at a very early stage, with a view to safeguarding the borrowing requirement of the enlarged group (NEWCO). This may mean existing lenders maintaining their current facilities, but novating these in favour of NEWCO. Alternatively another option would be to re-finance each college's debt with one lead bank; thereby consolidating all of NEWCO’s debt with one lender. 

Each college's borrowing profile and associated terms and conditions will differ for instance:
  • Financial Covenants
  • Margin applicable
  • Break Costs
In addition, some colleges have several lending relationships and in many cases, lenders differ from college to college; this in itself presents a challenge.

Finalysis is fully aware of the issues that colleges may experience as the merger process evolves, and is readily available to provide assistance. 

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