Commitment Letter

Definition:

A letter specifying the terms on which a lender will provide loans to a borrower, which is often accompanied by a Term Sheet. There are different types of Commitment Letters, depending on the type of debt transaction. The Commitment Letter (together with a signed acceptance and any appendices) may form the documentation for the loan or further agreements may be entered into on the basis of a Commitment Letter.

In the context of an acquisition financing, a Commitment Letter may provide for a combination of long- and short-term loans (the latter of which have the option to be drawn).

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