What is Equity Sweep?

Definition:

A form of Mandatory Prepayment. A provision in a Credit Agreement that requires loans to be prepaid with the proceeds of equity issuances, by either the borrower or a Guarantor, depending on the terms of the Credit Agreement. Equity Sweeps in the form of proceeds of equity issuances by a subsidiary of the borrower or Guarantor are referred to as Asset Sale Sweeps.

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