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Revolving Credit Facility (“RCF”)

  • Revolving Credit Facility provides the borrower with the ability to draw, repay, and redraw the Facility. Revolving Facility is a flexible Facility due to its repayment and re-borrowing features.


  • Revolving Credit Facility does not have a fixed repayment schedule vis a vis a Term Loan; the Revolving Facility is fully repaid on a bullet basis on the final maturity date of the Facility.


  • Revolving Credit Facility can have several constituent loans (tranche); drawn on different dates. Each of the constituent loan (tranche) is with a tenor of 30 days to 180 days. On the maturity date, constituent loan (tranche) is either repaid or rolled over. Lender could also suggest a cooling period of say 2 days to 5 days between repayment and redrawing of the tranche.


  • Revolving Credit Facility is typically extended with a tenor of 3 years to 5 years.


  • Revolving Credit Facility could be used by Companies to finance asset purchase, strengthening working capital position, finance the cash flow mismatch, acquisition, dividend pay-out, etc.


  • RCF gives Companies the ability to draw down and repay the loan as often as required over its life for agreed periods, making it ideal for cyclical cashflow challenges.


  • A Commitment Fee is paid on the undrawn amount of the Revolving Credit Facility. Commitment Fee is typically 20% to 30% of the Margin on the Revolving Credit Facility.


  • The borrower is only charged interest on the amount withdrawn under RCF, not on the entire RCF.


  • RCF is typically extended by the lenders to companies with good financials; given the flexibility in its end usage and repayment terms.


  • RCF can be extended on a secured or on an unsecured basis by lenders.

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