Definition for : Comfort letter

A Credit enhancement for a borrowing can take the form of a Letter of comfort signed by the mother-company of the borrower. In this letter, which does not constitute a legally-binding guarantee, the mother-company indicates that: (i) it is fully aware of its Subsidiary's borrowing; and (ii) will do the neccessary to procure that its Subsidiary has the Financial resources to reimburse the said borrowing.
(See Chapter 22 Shares of the Vernimmen)
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