Jurisdiction(s):
United Kingdom

Key definition

Unitranche definition

What does Unitranche mean? Unitranche financing is a single secured loan that economically combines senior and subordinated (mezzanine) debt into one facility with a blended interest rate. It is widely used in private credit-backed leveraged buyouts (LBOs), acquisitions, refinancings and recapitalisations. The term is not defined by legislation or case law; it is a market expression used in acquisition finance. Key legal features include: one facility agreement and one security package, a single set of covenants and events of default, and a single ranking against the borrower group. Behind the scenes, lenders allocate “first-out/last-out” risk and return under an agreement among lenders (AAL) or similar...

European unitranche financing: structures, borrower advantages and disadvantages, intercreditor frameworks (super-senior RCF), Agreements Among Lenders, and first loss/second loss arrangements

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Practice notes

Unitranche facilities have become a core source of financing for both financial Sponsor-backed and non sponsor-backed borrowers in the European leveraged loan market. First gaining traction in the US mid‑market in 2005, they have, from 2012 onwards, steadily captured a share of the European mid‑market each year. This Practice Note describes unitranche facilities, sets out the benefits and drawbacks for borrowers, and examines their principal features in depth. For broader introductory material on acquisition and leveraged finance, see Practice Note: Acquisition finance—introductory guide. For explanations of terminology used in this Practice Note, see: Glossary of acquisition finance terms and jargon.

What is a unitranche facility?

In essence, a unitranche facility is a single‑tranche term loan bearing a blended senior/junior interest rate, typically recorded in one loan agreement. Unitranche financings are commonly arranged by non‑traditional lenders, ie private debt funds and other alternative credit providers, and are provided in amounts from around €10m up to €2bn. At the upper end of the spectrum, debt funds frequently compete with the high yield and European Term Loan B markets for the most visible and complex transactions, including large...

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Lee Federman

Lee Federman has a wide range of experience across debt finance products and has worked in several key financial jurisdictions (London, New York, Hong Kong, and Amsterdam). He advises bank lenders, alternate credit providers, major financial sponsors, and their portfolio companies on cross-border investment grade and leveraged financings and other event-driven financings.Lee acted on deals involving a number of private equity sponsors active in Europe prior to joining Jones Day in November 2018 including Apax, Apollo, Blackstone, Carlyle, Graphite, KKR, Montagu, Permira, Rutland, and Waterland as well as alternate capital providers including Ares, Crescent, Fortress, Gemcorp, Oppenheimer, Towerbrook, and Tyndaris.Lee is recommended in Legal 500 UK (2016-2018) for acquisition finance and general syndicated lending and described as "knowledgeable, responsive and practical" and praised for his ability to "explain complicated matters in plain English." Lee also worked with Credit Suisse and Lehman Brothers on...

Web page updated on 21/05/2026

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