A Letter of Comfort (LoC) is a letter issued to a lending institution by a stakeholder of the company acknowledging support of the attempt for financing asked by that company. A letter of comfort does not imply that the parent company guarantees repayment of the loan being sought by the subsidiary company. It merely gives reassurance to the lending institution that the parent company is aware of the credit facility being sought by the subsidiary company, and supports its decision.
In the BSES case, the Delhi government has 49 per cent stake in the two discoms while the former has 51 per cent stake.
A Letter of Guarantee (LoG) is a written promise to take responsibility for another company’s financial obligation if that company cannot meet its obligation. The entity assuming this responsibility is the guarantor.
