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Structuring Delayed Draw Term Loans: Conditions Precedent, Ticking Fees, Fronting Arrangements, Evolving Uses

Recording of a 90-minute premium CLE webinar with Q&A

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Conducted on Wednesday, April 29, 2020

Recorded event now available

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This CLE course will discuss the terms and structuring of delayed draw term loans. The panel will review the evolving uses of delayed draw term loans (DDTLs) in leveraged buyouts (LBOs) and other private equity transactions and critical points of negotiation, including conditions precedent to making draws, ticking fees, loan term, and fronting arrangements in syndicated deals.


Along with the increase in the number of LBOs by private equity sponsors, there is a significant rise in the use of DDTLs. These loans are available to the borrower for drawing after the closing date but may not be reborrowed following prepayment.

The permitted uses of DDTL facilities include financing multiple acquisitions, refinancing of existing debt, and financing of capital expenditures of the borrower. To accommodate many--and sometimes evolving--purposes, borrowers have sought the ability to borrow the DDTL facility in multiple drawings during that extended period to enable flexibility around the use of proceeds.

The expanding uses of DDTL proceeds has led to increased negotiation over the conditions precedent to a DDTL draw, including reps and warranties and leverage limits. As DDTL commitment periods continue to lengthen, there has been an increased focus on the economics of DDTL arrangements, including the structure of "ticking fees" and upfront fees.

It is increasingly common for arrangers to assign DDTL commitments to a syndicate of institutional lenders. The credit agreement must include "fronting" language, which requires each DDTL lender to fund its pro-rata share of the DDTL at such time as a draw is made, and provide remedies if a lender fails to fund.

Listen as our authoritative panel examines the latest structuring concerns and deal points associated with DDTLs.



  1. Evolving uses of DDTLs: LBOs and other financings
  2. Conditions precedent to making a draw
    1. Reps and warranties
    2. Leverage covenants
    3. Other
  3. Term of commitment
  4. Ticking fees
  5. Financing of upfront fees
  6. Fronting provisions in syndicated a DDTL


The panel will review these and other vital questions:

  • How does a DDTL vary from revolving credit, and how are DDTLs currently being used in LBO and other private equity transactions?
  • What are the standard conditions to making a draw under a DDTL? What additional conditions might be imposed as the sponsor seeks more flexibility?
  • What are ticking fees, and how are they impacted by loan terms?
  • How are funding commitments addressed in a syndicated deal? What if one of the lenders fails to fund?


Dworkin, Meyer
Meyer C. Dworkin

Davis Polk & Wardwell

Mr. Dworkin advises lenders and borrowers on a variety of finance transactions, including acquisition financings,...  |  Read More

Jackson, Vanessa
Vanessa L. Jackson

Davis Polk & Wardwell

Ms. Jackson’s practice focuses primarily on the representation of financial institutions and corporate borrowers...  |  Read More

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