A revolving underwriting facility (RUF) is a financial arrangement where a group of underwriters agrees to provide loans to a borrower if the borrower is unable to secure funds through the Eurocurrency market. This type of facility allows the borrower to access short-term loans, typically through the purchase of Euronotes, which are debt instruments issued in the Eurocurrency market.
The term "revolving underwriting facility" is primarily used in finance and banking law. It plays a crucial role in corporate finance, particularly for companies seeking to manage liquidity and funding needs. Legal professionals may encounter RUFs when advising clients on financing options, drafting loan agreements, or navigating complex financial transactions. Users can utilize legal templates from US Legal Forms to create necessary documents related to RUFs.
Here are a couple of examples of abatement:
Example 1: A corporation may enter into a revolving underwriting facility with a group of banks to ensure it has access to funds if it cannot sell its bonds in the Eurocurrency market. This arrangement provides the corporation with financial flexibility.
Example 2: A company faces unexpected expenses and needs immediate cash flow. Through its RUF, it can quickly draw funds from the underwriters to cover these costs until it can secure more permanent financing. (hypothetical example)
| Term | Description | Key Difference |
|---|---|---|
| Revolving Credit Facility | A credit line that allows the borrower to draw funds, repay, and borrow again. | RUF specifically involves underwriters and is linked to Euronotes. |
| Term Loan | A loan for a specific amount that is repaid over a set period. | RUF is revolving and provides ongoing access to funds rather than a one-time loan. |
If you believe a revolving underwriting facility may be beneficial for your business, consider the following steps:
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| Attribute | Details |
|---|---|
| Typical Fees | Fees vary by lender and agreement terms. |
| Jurisdiction | Applicable in various jurisdictions, particularly where Eurocurrency markets operate. |
| Possible Penalties | Late fees or penalties for non-compliance with loan terms. |
The main purpose is to provide borrowers with immediate access to funds when they cannot secure financing through traditional markets.