Cash Sweep

searcher profile

April 21, 2020

by a searcher in New York, NY, USA

I'm curious what people's experiences have been with successfully removing a cash sweep? I know for some lenders, the exclusion of this can be a non-starter but I'm curious if there are ways to distribute (excess) cash to shareholders early.

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commentor profile
Reply by a searcher
from University of California, Berkeley in San Francisco, CA, USA
Former banker here. Sweep structures can be loosely put into two categories: 1) ABL or Revenue based loans and 2) structured to de-lever. The latter is called excess CF recapture which is negotiated at term-sheet phase for lender to address bringing down leverage in a defined time time. For ABL loans, if CF leverage and collateral coverage is solid, sweep can be relaxed. On Revenue based loans, the lender gets comfortable largely by having first position to your cash (hence the most difficult to avoid sweep. To address your distribution question, most lenders want control and priority over dividends.
commentor profile
Reply by a lender
in Falmouth, MA, USA
I am assuming the sweep is related to a revolver or ABLOC. My question is, how important is the revolver to you, and what alternative options do you have? Feel free to reach out to me at redacted
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