An article by Michael Scolaro, Senior Vice President, Business Development Officer, with Fleet Capital, responsible for sourcing and funding credit facilities in Canada and Ira Kreft, Executive Vice President and Group Manager (Central North America) with Fleet Capital Corporation. In November 2003, Stelco Inc., one of Canada's largest steel producers, obtained a new C$350-million asset-based revolving credit facility that replaced its existing senior debt. Over the last three years, many upper-middle-market and large corporate borrowers have made a similar switch to an asset-based loan structure. In this article, we will provide some background on senior debt and an overview of the structure and benefits of the asset-based lending alternative. Senior debt can be categorised in several ways, including the level of collateralisation behind the loan.
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