The Cashless Roll: A Primer

Recent refinancings of syndicated credit facilities, as well as repricings and amend-and-extend amendments, have often been accomplished utilizing, in part, a "cashless roll" mechanism. Although not a new feature of syndicated credit facilities, it is being used with increasing frequency and transparency, and the technology for applying "cashless rolls" is evolving as borrowers, lenders and arrangers recognize the complexities involved. This client alert provides an overview of the "cashless roll" mechanism, including explanations of when, why and how it has been employed in recent U.S. syndicated credit facilities.

WHAT IS A CASHLESS ROLL?

A "cashless rollover" or "cashless roll" is a deemed exchange of existing term loans for new or amended term loans from the same lender to the same borrower. As the name suggests, the exchange is accomplished on an in-kind, or cashless, basis. In effect, a lender "rolls over" its principal amount from one credit facility to a