easy · Investment Banking ma-lbo
In an LBO, what is the primary purpose of a 'cash sweep' provision in a credit agreement?
- To allow the company to pay out higher dividends to the private equity sponsor.
- To convert interest-bearing debt into non-voting preferred equity.
- To ensure the company maintains a minimum amount of cash for seasonal working capital.
- To mandate that excess free cash flow be used to prepay outstanding debt principal.
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