One of the more noticeable developments on the Dutch debt market during the past year was the incorporation of an asset-based lending or ABL facility into the borrower's capital structure, in combination with a traditional cash flow-based term facility. In such a structure, the ABL facility is generally used for working capital purposes while the term facility is generally used to finance an acquisition, a dividend recap or for capital expenditures. However, other uses of the ABL facility are possible. A term facility can be made available by one or more commercial banks or by direct or alternative lenders, for example in the form of a traditional term loan or a unitranche financing. An ABL facility is usually provided by commercial banks or specialised asset-based lenders, as direct and alternative lenders generally cannot extend revolving credit or overdraft facilities and certainly no working capital facilities that require lose monitoring such as an ABL facility.
By David Viëtor, Partner NautaDutilh NV, 4 November 2015