Pages from Covenant Review - Will EBITDA Become Infected by a Coronavirus Addback

Global financial markets are reeling in the wake of the COVID-19 coronavirus (“Coronavirus”) outbreak.1  Although the travel industry is the hardest hit U.S. sector to date, the impact of a global coronavirus outbreak is expected to be widespread across many industries. In this report, we examine whether issuers can make adjustments to EBITDA based on coronavirus-related losses. We also describe a novel addback for adjustments based on lost earnings from non-recurring events, potentially including the Coronavirus outbreak.


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On June 30th the ARRC published an updated recommendation for fallback language for syndicated loans (“the 2020 recommendation”).