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Loan syndication |
Loan participation |
|
Description |
Each lender has a separate loan with the borrower |
The lead lender has a loan with the borrower; participating lenders have an interest represented by a certificate of participation |
How to do the 10% test |
The borrower performs the 10% test separately for each lender in the syndication |
The borrower performs the 10% test for the entire loan with the lead lender |
Original loan syndication |
New loan syndication |
|
Principal balance |
$52,000,000 |
$100,000,000 |
Annual coupon |
5.5% |
5.0% |
Original term |
10 years |
5 years |
Remaining term |
3 years |
5 years |
Unamortized debt issuance costs |
$695,000 |
— |
New lender fees |
— |
$4,000,000 |
New third-party fees |
— |
$1,000,000 |
Bank |
Balance of original syndication |
Balance of new syndication |
Principal change |
Classification |
||
A |
$5,000,000 |
$5,000,000 |
— |
Original debt |
||
B |
$20,000,000 |
$30,000,000 |
$10,000,000 |
Original debt and additional borrowing |
||
C |
— |
$60,000,000 |
$60,000,000 |
Additional borrowing |
||
D |
$12,000,000 |
$5,000,000 |
($7,000,000) |
Original debt and partial pay-down |
||
E |
$15,000,000 |
— |
($15,000,000) |
Full pay-down |
||
Total |
$52,000,000 |
$100,000,000 |
Bank |
Balance of new syndication |
Percentage of new syndication |
Allocation of new lender fees |
A |
$5,000,000 |
5.0% |
$200,000 |
B |
$30,000,000 |
30.0% |
$1,200,000 |
C |
$60,000,000 |
60.0% |
$2,400,000 |
D |
$5,000,000 |
5.0% |
$200,000 |
E |
— |
— |
— |
Total |
$100,000,000 |
100.00% |
$4,000,000 |
New cash flow detail |
||||||
Bank |
Original cash flows |
Principal change |
Lender fees |
Repayment |
Total new cash flows |
Percent change |
A |
($5,000,000) |
— |
($200,000) |
($5,000,000) |
($5,200,000) |
(4%) |
B |
($20,000,000) |
$10,000,000 |
($1,200,000) |
($30,000,000) |
($21,200,000) |
(6%) |
D |
($12,000,000) |
($7,000,000) |
($200,000) |
($5,000,000) |
($12,200,000) |
(2%) |
Bank |
Balance of original syndication |
Percentage of original syndication |
Allocation of unamortized issuance costs |
Accounting for unamortized issuance costs |
A |
$5,000,000 |
9.6% |
$66,827 |
Defer |
B |
$20,000,000 |
38.5% |
$267,308 |
Defer |
D |
$12,000,000 |
23.1% |
$160,385 |
Defer |
E |
$15,000,000 |
28.8% |
$200,480 |
Expense |
Total |
$52,000,000 |
100.0% |
$695,000 |
Bank |
Balance of new syndication |
Percentage of new syndication |
Allocation of new third-party fees |
Accounting for new third-party fees |
A |
$5,000,000 |
5.0% |
$50,000 |
Expense |
B |
$30,000,000 |
30.0% |
$300,000 |
Expense |
C |
$60,000,000 |
60.0% |
$600,000 |
Defer |
D |
$5,000,000 |
5.0% |
$50,000 |
Expense |
E |
— |
— |
— |
|
Total |
$100,000,000 |
100.00% |
$1,000,000 |
PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
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