As part of an appropriate capital structure, the use of senior debt provides a relatively low cost of growth capital to companies with cash flow available to service the indebtedness. Since 1992, GCP has assisted in arranging over $100 million of senior debt availability for its clients. GCP provides its clients with access to senior-level contacts, and our familiarity with current market conditions allows us to negotiate the most favorable terms.

Senior debt represents the lowest cost of capital (no dilution to current shareholders) due to the current coupon, secured collateral position, and mandatory principal repayment schedule required on term facilities. Typical facilities have principal repayment structures based on five to seven year straight-line amortization. The senior debt raising process requires the least amount of time, compared to a sub-debt or equity placement, and does not require board representation. However, restrictive terms and financial covenants may restrict the company’s ability to grow. Additionally, the company may not be able to service debt (interest and principal) during an industry downturn.