easy · Corporate Credit Analysis

In a 'covenant-lite' credit agreement, when does the springing maintenance covenant typically become 'active'?

1. When the company's stock price falls by more than 50% in a single year.
2. When drawings on the revolving credit facility exceed a specified percentage (e.g., 35%).
3. When the borrower's EBITDA drops below its interest expense for two consecutive quarters.
4. When the lead bank in the syndicate decides to sell its position.

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