Debunking Common Covenant Myths #1 –Priming Debt Analysis
Welcome to the first in our mini-video series on Debunking Common Covenant Myths! We’re starting with a topic of critical importance to lenders, whether they’re seeking to protect their existing investment or looking to make a lucrative new one – Priming Debt Analysis.
Many market participants think that only the Debt and Liens covenants are relevant to this analysis, and they would be more or less correct in the market a decade ago before the machinations of J. Crew, Serta Simmons and their progeny came onto the scene.
Now that covenant packages have been specifically engineered for restructuring flexibility, there are several other covenants and related provisions that must be added to this list:
- Restricted Payments covenant (and the Permitted Investments definition)
- Designation of unrestricted Subsidiaries provisions
- Asset Sales covenant
- Amendment provisions
- Pro rata sharing provisions
FLT’s Leveraged Finance Covenant Training course reviews all of these provisions in our Distressed Covenant Analysis module, which guides our students through a comprehensive priming debt capacity analysis step-by-step.
Get in touch to find out more and for access to our taster course!
by Sabrina Fox