Beyond the Term Sheet: Engineering Resilient Capital Stacks
Most negotiation energy goes into rate and quantum. The terms that determine whether a facility helps or hurts in year three usually sit further down the term sheet.
- Drawdown conditions can make sanctioned capital effectively unavailable.
- Inter-creditor terms decide who controls a difficult conversation.
- Cure rights and headroom are the cheapest protection you can negotiate.
Conditions precedent and drawdown mechanics
A sanction is not capital. Conditions tied to approvals, third-party confirmations or milestone certification can delay availability by months. These deserve as much attention as pricing.
Security and inter-creditor architecture
Where multiple providers sit in the stack, the inter-creditor agreement determines enforcement rights, waterfall priority and who must consent to a restructuring. Negotiating this late, under stress, is the worst possible time.
Covenants, cure rights and reporting
Testing frequency, headroom, equity cure provisions and the reporting burden all shape day-to-day life under the facility. A slightly higher spread with workable covenants is often the better commercial outcome.
This note reflects our advisory perspective and is not investment advice. Speak with a senior partner to discuss how current market conditions apply to your specific capital requirement.