medium · Private Credit underwriting-credit-analysis
A lender is evaluating an 'equity cure' provision. The company has $100M in debt and $20M in LTM EBITDA, breaching a 4.5x leverage covenant. The sponsor injects $10M of new equity.
If the agreement treats the cure as a reduction in debt, what is the new leverage ratio?
- 5.00x
- 4.50x
- 4.17x
- 3.50x
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