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You don't need to change the structure. Change management, new management raises all the new debt. Unless there is a bullet proof leverage covenant, then the e
by zzleeper 7y ago
You don't need to change the structure. Change management, new management raises all the new debt.
Unless there is a bullet proof leverage covenant, then the existing lenders can't do zip about that.
Thus, their only option is to go to the table and "accept" the new structure.
- travisoneill1 7y agoThis is not a leverage covenant. This is a change in control provision, which there always is for any type of senior debt.
- valuearb 7y agoYou are exactly like the author. You don't understand enough to make the conclusions you make. Lenders aren't stupid in general. They have covenants to protect themselves. In the case of Basecamp, which likely has almost zero physical assets, any loan is going to be very contingent on protecting the levels of profitability necessary to repay it. Whoever owns Basecamp won't be able to get a credit card in it's name without lender approval. Source: I spent the last year working for a firm that is funded by venture capital loans. Every other loan & credit line had to be made subordinate to theirs, and we could not borrow anything new without their approval. It wouldn't matter who we sold the business to, they'd have to agree to the same restrictions or no sale.