medium · Private Credit documentation-covenants-terms
If a lender's leverage covenant is based on 'Net Leverage' and the company earns $40,000,000 EBITDA with $200,000,000 debt and $20,000,000 cash, they are at 4.50x.
If they issue $20,000,000 more debt and keep it on the balance sheet as cash, what is the new Net Leverage?
- 5.00x
- 5.50x
- 4.50x
- 4.00x
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