medium · Debt Capital Markets credit-ratings-risk
A 'Cov-Lite' Term Loan B has no maintenance covenants but includes an incurrence-based 'Negative Covenant' that prohibits dividends if the 'Fixed Charge Coverage Ratio' (FCCR) is below 2.0x. EBITDA is $100 million, Capex is $20 million, and Cash Interest is $40 million.
Does the company have the capacity to pay a dividend?
- Yes; FCCR is exactly 2.00x
- No; FCCR is 1.50x
- Yes; FCCR is 3.00x
- Yes; FCCR is 2.50x
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