medium · Private Credit documentation-covenants-terms
A borrower has $200,000,000 in debt and $50,000,000 in EBITDA (4.0x leverage). The covenant is 5.0x. In Year 2, the company generates $50,000,000 in FCF, all of which repays debt, but EBITDA falls to $45,000,000.
What is the new headroom?
- 20.0%
- 25.0%
- 10.0%
- 33.3%
Sign up free to see the explanation and track your rank →
More Private Credit documentation-covenants-terms practice
- A borrower's credit agreement includes a 'Negative Pledge'.… — Is this allowed?
- If the current SOFR rate drops to 0.25%, what is the all-in interest rate the borrower mus
- A loan is priced at SOFR + 600 bps with a 1.0% floor. If the current SOFR rate is 0.5%, wh
- If the equity tranche is $50M (10% of capital), what is the 'Cash-on-Cash' yield before de
- What is the company's 'covenant headroom' in EBITDA terms?
- If the company subsequently raises a 'down round' at $6.00 per share, what is the fund's n
- A loan agreement specifies that the borrower's Total Leverag… — How should this covenant b
- Is the company in default?