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On an acquisition finance transaction, the borrowing group, in addition to the debt (whether loans or bonds) required to fund the transaction, will typically need other types of bank facilities. These may include, for example, an overdraft, stand-by letter of credit facility or foreign exchange facility and can often all be provided under the umbrella of a revolving credit facility (RCF) in the senior facilities agreement (SFA).

The RCF will normally be able to be drawn in three different ways:

1. •

   in cash (in the form of revolving loans)

2. •

   as syndicated non-cash facilities, eg letters of credit—these will be specified in the documentation, and

3. •

   in the form of bilateral facilities known as ancillary facilities

Unlike a revolving credit facility drawn in cash, ancillary facilities are not normally of a type that would be suitable for dividing up amongst several lenders. The documentation therefore caters for them to be provided bilaterally. For more information on the revolving credit facility, in particular how revolving loans work, see Practice Note: Senior facilities.

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