medium · Private Credit loan-structures-instruments
A private credit fund provides a $50,000,000 senior secured loan to BlueRock Manufacturing with a call protection provision of 'NC-1, then 101'.
What does the 'NC-1' portion of this provision signify?
- The borrower is prohibited from prepaying the loan entirely for the first year of the term.
- The lender cannot demand repayment for at least one year regardless of covenant breaches.
- The loan principal must be reduced by 1% through mandatory amortization in Year 1.
- The borrower must pay a 1% penalty if they choose to refinance within the first year.
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