Structure
Super senior RCF
A super senior RCF is the working capital line that sits alongside a unitranche facility and ranks ahead of it on enforcement. It is usually provided by a bank, and it is priced far tighter than the debt it outranks.
Also called SSRCF · super senior revolving facility · super senior working capital line
The revolver is small and sits at the front. Everything larger behind it is repaid only once it is cleared.
| Claim | Rank |
|---|---|
| Enforcement costs | First |
| Super senior RCF | Ahead of the term debt |
| Unitranche facility | 30–62 on the scale |
| Junior or mezzanine | 62–85 on the scale |
| Shareholders | Last |
Typical ranking in a UK lower-mid-market unitranche structure. Individual intercreditor terms vary.
Why the ranking exists
A unitranche fund lends the term debt but rarely wants to provide working capital. Revolving money is operationally demanding, it moves daily, and it earns little. Banks are set up for it and funds are not.
So the structure splits: the fund takes the term debt, a bank takes the revolver, and the bank insists on ranking ahead. The logic is straightforward. A working capital line is drawn and repaid constantly, and a lender advancing money that will be repaid in weeks is taking a different risk from one lending for five years. Super senior ranking is the price of that money being available cheaply and on demand.
The result is a small facility sitting at the front of the queue and a much larger one behind it, which is exactly the inversion of size and seniority that surprises borrowers when they first see the waterfall.
What super senior means in practice
On enforcement, proceeds are applied in order. Enforcement costs and the security agent's expenses come first. The super senior revolving facility is repaid next, in full, before the unitranche receives anything. Only then does the term lender recover, followed by any junior layer, with shareholders last.
Both lenders usually share the same security package, a debenture over the company and a charge over its shares, held by a common security agent. The ranking is not achieved by giving the bank better security; it is achieved contractually, through the agreement among lenders that allocates the proceeds of that shared security.
That distinction matters when reading the Companies House file. The register will show one charge held by a security agent, and nothing on the public record reveals which lender ranks where. The priority lives in a private agreement.
On a £4m line averaging £1m drawn, interest and commitment fee together run near £99k a year.
| Component | Annual cost |
|---|---|
| Interest on £1m drawn | £67.5k |
| Fee on £3m undrawn | £31.5k |
| Total | £99k |
Worked example from the RCF guide: £4m peak, £1m average drawn, bank all-in 6.75%, commitment fee 1.05% on the £3m average undrawn.
What it costs
Bank pricing, which is the point. On a business whose working capital peaks at £4m in an autumn stock build and averages £1m of need across the year, a £4m committed revolver carries the average drawn balance at a bank all-in near 6.75%, about £67,500 a year, plus the commitment fee on the £3m average undrawn at around 1.05%, about £31,500.
That is roughly £99,000 a year in total, about 2.5% of the peak requirement. Against a unitranche facility costing 9.25% to 11.75% on drawn money, the revolver is by far the cheapest debt in the structure.
In the heavy months the interest line rises and the fee line falls; over the cycle the average is what you pay. That averaging is why sizing against the peak rather than the average makes sense for the commitment, even though most of the year the money sits undrawn.
How it is sized
Against the working capital swing, not against a round number and not against the term facility.
The measure that matters is peak-to-trough movement across at least two full cycles, plus a margin for a bad quarter. A business whose need peaks at £4m and troughs near zero needs a £4m commitment even though it averages £1m, because the commitment has to cover the peak or the line fails at the moment it is needed.
Two structural points follow. The commitment fee prices the gap between peak and average, so a business with a spiky cycle pays more for the same average utilisation than one with a smooth cycle. And a revolver sized to the peak year-round is more expensive than one that steps up for defined months, though not every lender will engage with a seasonal structure.
A structure sold as one lender and one document is often two lenders and three documents.
| Element | Provider |
|---|---|
| Day-to-day banking | Bank |
| Revolving facility | Usually the bank |
| Term debt | The fund |
| Delayed draw / accordion | The fund |
Typical allocation in a unitranche-plus-revolver structure at £3-15m. Structures vary.
The cap, and why it is negotiated
The fund does not agree to unlimited super senior debt ranking ahead of it. The agreement among lenders caps the super senior amount, and that cap is one of the more consequential numbers in the structure.
It usually covers the revolving commitment plus any hedging liabilities and sometimes an agreed headroom for future increases. A cap set exactly at the current commitment means any future increase in the working capital line requires the fund's consent, which they may price or refuse.
For a growing business that is a real constraint. Working capital requirements rise with revenue, and a business that doubles turnover will need a larger revolver than the one it signed with. Negotiating headroom into the super senior cap at the outset is far easier than seeking consent later from a lender who gains nothing by giving it.
What it means for the borrower day to day
Two relationships rather than one. The fund holds the term debt and the covenant package; the bank holds the revolver and usually the operating accounts, payments and cash management.
That is workable and is how most unitranche structures run, but it removes one of the advantages the single-lender story implies. A structure sold as one lender and one document is often two lenders and three documents: the unitranche facility agreement, the revolving facility agreement, and the agreement among lenders between them.
It also means a covenant conversation and a working capital conversation happen with different institutions, and a business under pressure discovers that the bank providing its daily liquidity and the fund holding its term debt do not necessarily see the situation the same way.
Where the negotiation really sits
Less in the revolver itself, which is fairly standard, and more in the agreement among lenders that sits behind it.
The provisions worth attention are the super senior cap and whether it has headroom for growth, whether hedging liabilities count against it, what happens to the revolver if the term lender accelerates, and whether the bank can demand repayment independently or must act with the fund. A borrower whose revolver can be pulled while the term debt is still performing has a liquidity risk that the headline structure does not disclose.
None of this is visible from the term sheet, which will describe a revolver and a term facility and say little about how they interact. Asking for the intercreditor principles at term-sheet stage rather than at first draft is the way to see it in time to negotiate.
Common questions
What is a super senior RCF?
A revolving working capital facility that ranks ahead of the term debt on enforcement, usually provided by a bank alongside a unitranche facility from a fund. It is typically the smallest tranche in the structure and sits at the front of the payment waterfall.
Why does the revolver rank ahead of the term debt?
Because revolving money is drawn and repaid constantly, so a lender advancing funds that will return in weeks is taking a different risk from one lending for five years. Super senior ranking is the price of that money being available cheaply and on demand, and it is why funds are content to sit behind it.
Who provides the super senior facility?
Usually a bank rather than the fund. Working capital lines are operationally demanding, move daily and earn little, which suits a bank's infrastructure and not a fund's. The bank typically holds the operating accounts, payments and cash management as well.
What does a super senior RCF cost?
Bank pricing. On a business peaking at £4m of working capital need and averaging £1m drawn, a £4m committed line costs about £67,500 a year in interest at a bank all-in near 6.75%, plus roughly £31,500 in commitment fee on the £3m average undrawn. That is around £99,000 a year, about 2.5% of the peak requirement.
Is the super senior amount capped?
Yes, in the agreement among lenders, and the cap matters. It usually covers the revolving commitment plus hedging liabilities and sometimes headroom for increases. A cap set exactly at the current commitment means any future increase in the working capital line needs the fund's consent, which is a real constraint for a growing business.
Does the public register show which lender ranks first?
No. Both lenders usually share one security package held by a common security agent, so the Companies House file shows a single charge and reveals nothing about priority. The ranking is contractual and lives in the private agreement among lenders.
How should I size the revolving facility?
Against the peak-to-trough working capital swing across at least two full cycles, plus a margin for a bad quarter. The commitment must cover the peak or the line fails when it is needed, even though most of the year it sits largely undrawn and you pay a commitment fee on the difference.
What should I negotiate in the intercreditor?
Headroom in the super senior cap for future growth, whether hedging liabilities count against it, what happens to the revolver if the term lender accelerates, and whether the bank can demand repayment independently. A revolver that can be pulled while the term debt is still performing is a liquidity risk the headline structure does not disclose.
The full treatment sits in the guide: rcf vs term loan.
Related terms
This page explains a term as it is used in the UK lower-mid-market. It is general information, not advice on any particular facility. Terms vary between lenders and between deals, and the drafting in your own agreement governs.