Funding Source Reallocations Overview

Purpose

Funding Source Reallocations let users change who participates in a funding source, and at what share, after funding has already started. For example, a capital provider can exit a syndicated loan while a new capital provider enters and takes over its share.

Users make the change in a single Reallocation workflow. The workflow moves the Commitment, Funded to Date, and Repaid Amount between allocations without changing the funding source's overall position, and it records the change in Reallocation History and on the Transactions page.

Key Features

1. Single Reallocation workflow: Start a Reallocation from the funding source row in Capital Stack and move through up to four steps: Structure, Funded to Date, Repaid Amount, and Review. The Funded to Date and Repaid Amount steps appear only when they apply.

2. Add, update, retire, or remove allocations: Add a new Capital Provider, change each allocation's share or commitment, retire an allocation by reducing it to $0, or remove an allocation that has no transaction history.

3. Effective Date: Record the Reallocation transaction with a date in the past or up to 10 days in the future. Balances update in Capital Stack as soon as you save.

4. Reallocation History: Review every saved Reallocation on the funding source, including current, new, and change values for each allocation, the Effective Date, the posted date and time, and the user who completed it.

5. Transaction visibility: Each Reallocation posts funded and repaid redistribution transactions to the deal's Transactions page, with a net effect of zero.

Target Users

Users with full access to manage a deal's Capital Stack who need to change who participates in a funding source, and at what share, after funding has already started.

Prerequisites

Before you start a Reallocation, make sure the funding source and the deal are ready.

• The Deal's Sources & Uses have been finalized.

• The funding source has a Structure Type of Allocations (Participation, Syndication, or Fund) or None.

• You have full access to manage the deal's Capital Stack.

• You know the new values for each allocation: the share or commitment, the Funded to Date, and the Repaid Amount.

• No Interest Deferral, Realized Gain, or Realized Loss transactions have been posted against the funding source. If any have, reverse them first.

How It Works

Reallocate a Funding Source

A Reallocation is separate from a Draw. You start it from the Capital Stack, not from within Draw Management. The workflow has up to four steps: Structure, Funded to Date (only when it applies), Repaid Amount (only when it applies), and Review.

Step-by-Step Instructions:

1. Open the applicable deal and navigate to Capital Stack.

2. Locate the funding source you want to change.

3. Click the Reallocate action button on the funding source row. The Reallocate window opens with the funding source name in the title.

Set the Effective Date

1. Review the Effective Date. It defaults to today. You can choose a date in the past, or up to 10 days in the future.

Note:

The Effective Date is the date recorded on the Reallocation transaction. It does not delay the change if future dated. When you save, the new structure and balances appear in Capital Stack immediately.

Step 1: Update the Structure

1. To add a new participant, click Add Allocation and select the Capital Provider (an Organization or a Fund). Optionally enter an EUID.

2. Enter the new share or commitment for each allocation. The percentage column shows each allocation's share of the total.

3. To retire an allocation, reduce its share to 0%. See Retire or Remove an Allocation below.

4. Confirm the allocations total 100% of the funding source and the commitments add up to the funding source's commitment amount.

5. Click Next.

If the funding source has no funding yet, the Reallocation only restructures the allocations and you can save here.

Step 2: Reallocate Funded to Date

1. For each allocation, enter the New Funded to Date. Move funding off allocations that are exiting or shrinking, and onto allocations that are entering or growing.

2. Confirm the total of the new values equals the total of the current values. The Reallocation moves existing funded dollars. It does not add or remove any.

3. Click Next.

Step 3: Reallocate Repaid Amount

This step appears only when the funding source has funded allocations. Repaid Amounts work like Funded to Date: move them off exiting allocations and onto the others.

1. For each allocation, enter the New Repaid Amount.

2. Confirm the total of the new values equals the total of the current values.

3. Click Next.

Step 4: Review and Save

1. Review the summary of changes. Each allocation is shown as added, updated, retired, or removed, and the review lists the funded and repaid Reallocation payments that will post.

2. Click Save.

After you save, the Capital Stack reflects the updated structure, Commitment, Funded to Date, Repaid Amount, and Principal Balance for every Capital Provider. Existing and new Draws use the new structure. A retired allocation is not funded again, but it stays in the history.

Retire or Remove an Allocation

What you can do with an allocation depends on whether it has transaction history.

A retired allocation stays on the funding source so that Reallocation History and the transaction history stay intact. You can give a retired allocation a commitment again in a later Reallocation, and it can then take part in Draws. This avoids creating a duplicate record for the same Capital Provider.

When you review a Reallocation, the summary shows whether each allocation is being added, updated, retired, or removed.

Review Reallocation History

Every saved Reallocation is recorded so you can audit what changed, who changed it, and when.

1. Open Capital Stack and select the eyeball icon on the funding source.

2. In the details pane, open the Reallocations tab.

3. Select a Reallocation to expand it.

The tab shows one row for each Reallocation. When you expand a row, you see each allocation with its current, new, and change values for Commitment Amount, Funded to Date, and Repaid Amount. Each allocation is labeled as added, updated, or retired. The row also shows the Effective Date, the date and time it was posted, and the user who completed it.

Review Reallocation Transactions

A Reallocation posts to the deal's transactions so the money movement is visible.

1. Navigate to Transactions.

2. Locate the Reallocation transactions.

3. Review the funded redistribution and the repaid redistribution.

The two transactions have a net effect of zero. The funded and repaid amounts move off the exiting allocations and onto the receiving allocations, and allocations you did not change stay the same. A Reallocation that moves both funded and repaid amounts posts two payments. They both link back to the same entry in Reallocation History.

Benefits

• Change who participates in a funding source, and at what share, after funding has already started.

• Move Commitment, Funded to Date, and Repaid Amount between allocations in a single workflow without changing the funding source's overall position.

• Retire and later reuse an allocation instead of creating a duplicate record for the same Capital Provider.

• Audit what changed, who changed it, and when through Reallocation History and the Transactions page.

Workflow Considerations and Limitations

Keep the following in mind when you reallocate a funding source:

• Allocation totals: Allocations must total 100% of the funding source, and their commitments must equal the funding source's commitment amount.

• Funded to Date: An allocation's New Funded to Date cannot exceed its new commitment. The total of the new values must equal the total of the current values.

• Repaid Amount: An allocation's New Repaid Amount cannot exceed its New Funded to Date, and it cannot be negative. The total of the new values must equal the total of the current values.

• Capital Provider match: At least one allocation must be the same Capital Provider as the funding source, or a Fund.

• Allocations with history: You cannot delete an allocation that has funding or repaid transactions. Reduce it to $0 to retire it. You also cannot change the Capital Provider on an allocation that has funding history.

• Funded allocations in the edit form: Once an allocation has transactions, its commitment and percentage are read-only in the funding source edit form. Use Reallocate to change them.

• Transactions that block a Reallocation: If Interest Deferral, Realized Gain, or Realized Loss transactions have been posted against the funding source, you see the message "Reallocation is not allowed if interest deferral, realized gain or realized loss have been posted. Reverse these transactions and then proceed."

• Effective Date: The Effective Date can be in the past, or up to 10 days in the future. It dates the transaction only. Structure, Funded to Date, Repaid Amount, and Principal Balance update in Capital Stack as soon as you save.

• Funding Notices: A Reallocation does not update a Funding Notice you already generated. Review any notice sent before the Reallocation and resend it if needed.

• Draws: You start a Reallocation from the funding source, not from Draw Management.