Concentrate On Debt Limits

A common feature included in credit agreements is a limitation on the amount of the unfunded capital commitment of a single investor (or the aggregate unfunded capital commitments of a class of investors) that can be included in the calculation of the borrowing base on any date of determination. Such feature serves to protect a lender against too great of an exposure to a single investor (or class of investors) and better ensures that the borrowing base is comprised of a diversified pool of unfunded capital commitments. In the early stages of fundraising, the investor pool may be limited in number and largely comprised of a short list of anchor investors. The application of a concentration limit can significantly diminish the calculation of the borrowing base under these circumstances. As such, borrowers often ask that the application of concentration limits commence on a predetermined date after closing the facility or, in the most lenient of circumstances, after the