£150M Senior Facilities for UK Carve-Out
Multi-currency senior TLB and RCF supporting PE acquisition of industrial manufacturing division from FTSE parent.
Deal Overview
Transaction Type
Senior Facilities
Sector
Industrial Manufacturing
Term
7 years (TLB) + 5 years (RCF)
Jurisdiction
England & Wales
Total Facilities
£150M
Leverage
5.5x Net First Lien
Structure
£120M TLB + £30M RCF
Closing Date
Q3 2023
The Challenge
A mid-market private equity sponsor was acquiring a specialty manufacturing division carved out from an FTSE-listed parent, requiring senior debt that could flex across currencies and separation milestones.
Key complexity factors included:
- •Transition service agreement (TSA) complexity and interdependencies with standalone operations
- •Standalone financials requiring quality of earnings (QoE) analysis and lender comfort on pro forma performance
- •Multi-currency funding needs across GBP, EUR, and USD
- •Working capital volatility during separation and TSA ramp-down
Our Solution
We structured £150M of senior facilities combining a long-dated TLB with a multi-currency revolver, covenant architecture suited to carve-out execution, and accordion capacity for bolt-ons.
Structure
- →£120M TLB, 7-year tenor with back-ended amortization
- →£30M multi-currency RCF (GBP / EUR / USD)
- →Covenant-lite term loan with springing covenants on the RCF if utilization exceeds 40%
- →£25M accordion for qualifying acquisitions
Execution
- →10-week timeline from mandate to closing
- →QoE analysis integrated into lender underwriting and covenant setting
- →English law security package aligned to carve-out perimeter
- →TSA provisions reflected in the credit agreement and side letter mechanics
Deal Structure
Facility
Covenants
- •TL: Covenant-lite term loan
- •RCF springing: 6.5x if greater than 40% drawn
- •Portability: Sponsor-friendly mechanics
- •Restricted payments: Builder basket
Key Documentation
Senior Facilities Agreement
LMA-based senior facilities agreement with TLB and RCF tranches, multi-currency mechanics, and carve-out-appropriate representations and covenants.
Security Documents
English law security over shares, receivables, and material assets within the borrower group, coordinated for post-closing separation steps.
Intercreditor Agreement
Intercreditor arrangements governing lien and payment subordination as between senior tranches and any permitted junior capacity.
TSA Side Letter
Side letter linking transition services, cost allocations, and separation milestones to lender consent and reporting obligations where relevant.
Transaction Timeline
Debt raise & term sheet
Lender selection, indicative terms, and commitment to structure and timeline
Due diligence & documentation
Financial and legal diligence, credit agreement drafting, and QoE integration
Security & separation planning
Perfection of English law security and alignment of TSA and separation workstreams with lenders
Signing & closing
Final conditions, funding, and simultaneous completion of the carve-out acquisition
Outcome
The facilities supported a clean separation on plan, with liquidity and accordion headroom aligned to the sponsor's integration and M&A strategy.
Post-closing benefits:
- •Separation: Operational separation completed within 18 months, with the RCF providing flexibility through working capital swings.
- •Bolt-on: A strategic add-on closed at month 14 using £15M of accordion capacity on agreed incremental terms.
- •Covenant-lite TL: The term loan structure allowed management to focus on integration and performance rather than frequent maintenance covenant testing.
Discuss your financing needs
TULA Capital can support your transaction with structuring, lender outreach, and execution discipline.
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