hard · Private Credit & Debt documentation-covenants-terms
A direct lender requires a 'Material Adverse Change' (MAC) clause in the credit agreement.
What is the primary function of this clause?
- It allows the lender to refuse further funding or declare a default if there is a fundamental deterioration in the borrower's business or financial condition.
- It grants the lender the right to take control of the company's board of directors.
- It automatically adjusts the interest rate whenever market volatility increases.
- It prohibits the borrower from changing its senior management team without consent.
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