hard · Private Credit & Debt underwriting-credit-analysis
A borrower reports GAAP EBITDA of $50M. The Credit Agreement defines 'Covenant EBITDA' to include: pro-forma synergies capped at 20% of EBITDA, run-rate adjustments for a mid-year acquisition ($5M annual impact), and $3M in one-time restructuring charges.
If the total debt is $250M, what is the leverage ratio for covenant compliance purposes, and how does it compare to the 'economic' leverage (GAAP)?
- Covenant 5.00x; GAAP 3.97x
- Covenant 3.68x; GAAP 4.70x
- Covenant 4.31x; GAAP 5.00x
- Covenant 3.97x; GAAP 5.00x
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