Financial Covenant Clause Samples
A Financial Covenant is a contractual provision that requires a party, typically a borrower, to maintain certain financial metrics or ratios throughout the term of an agreement. These covenants may include requirements such as maintaining a minimum level of net worth, a maximum debt-to-equity ratio, or a minimum interest coverage ratio, and are often monitored through regular financial reporting. The core function of a Financial Covenant is to protect the lender by ensuring the ongoing financial health and stability of the borrower, thereby reducing the risk of default.
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Financial Covenant. (a) Borrower and its Restricted Subsidiaries shall not permit the Consolidated First Lien Net Leverage Ratio at the end of any Test Period (beginning with the fiscal quarter of Borrower ending on or about March 31, 2022) when the Aggregate Exposures exceed 40% of the total Revolving Commitments at such date (the “Financial Covenant Testing Threshold”) (excluding (x) issued or undrawn letters of credit, (y) cash collateralized letters of credit, guarantees and any other contingent obligations and (z) draws of Revolving Loans on the Closing Date for the first four fiscal quarters after the Closing Date), to be greater than 6.95 to 1.00.
(b) For purposes of determining compliance with the financial covenant set forth in Section 10.11(a) above (or for the financial covenant set forth in the ABL Credit Agreement), cash equity contributions (which equity shall be Permitted Equity and which shall be contributed in cash to Holdings (which shall be contributed to the common Equity Interests of Borrower) during such fiscal quarter or on or prior to the day that is 10 Business Days after the date financial statements are required to be delivered for such fiscal quarter pursuant to Section 9.01(a) or (b) (such 10-Business Day period being referred to herein as the “Interim Period”) will, at the request of Borrower, (x) be applied to reduce the Revolving Facility exposure to a level below the Financial Covenant Testing Threshold or (y) be included in the calculation of Consolidated EBITDA solely for the purposes of determining compliance with the financial covenant set forth in the ABL Credit Agreement or any refinancing thereof or the financial covenant under clause (a) of this Section 10.11 at the end of such fiscal quarter and applicable subsequent periods which include such fiscal quarter, be included in the calculation of Consolidated EBITDA solely for the purposes of determining compliance with such financial covenants at the end of such fiscal quarter and applicable subsequent periods which include such fiscal quarter (any such equity contribution so included in the calculation of Consolidated EBITDA, a “Specified Equity Contribution”); provided that (a) Specified Equity Contributions may be made no more than two times in any four fiscal quarter period and no more than five times during the term of this Agreement, (b) the amount of any Specified Equity Contribution shall be no greater than the amount required to cause Borrower to be in pro forma compliance with ...
Financial Covenant. So long as any Loan shall remain unpaid, any Letter of Credit shall remain outstanding or any Lender shall have any Commitment hereunder, the Borrower will maintain a ratio of Consolidated Debt to Consolidated Capital of not greater than 0.65 to 1.00 as of the last day of each fiscal quarter.
Financial Covenant. With respect to the Revolving Facilities only, permit the Net First Lien Leverage Ratio as of the last day of any fiscal quarter, solely to the extent that on such date the Testing Condition is satisfied, to exceed 4.90 to 1.00.
Financial Covenant. So long as any Advance shall remain unpaid, any Letter of Credit shall remain outstanding or any Lender shall have any Commitment hereunder, the Borrower will maintain a ratio of (a) Consolidated Indebtedness to (b) the sum of Consolidated Indebtedness plus Consolidated Net Worth of not greater than 0.65 to 1.0.
Financial Covenant. Except with the written consent of the Required Revolving Credit Lenders, the Borrower will not permit the Consolidated First Lien Net Leverage Ratio as of the last day of a Test Period (commencing with the Test Period ending on or about June 25, 2022) to exceed 8.30 to 1.00 (the “Financial Covenant”) (provided that the provisions of this Section 7.09 shall not be applicable to any such Test Period if on the last day of such Test Period the aggregate principal amount of Revolving Credit Loans (excluding, for the first four full Test Periods following the Closing Date, any Revolving Credit Loans applied to finance the Transactions and Letters of Credit (whether or not such Letters of Credit have been Cash Collateralized or backstopped)) that are issued and/or outstanding is equal to or less than 35% of the greater of (a) the Revolving Credit Facility and (b) $1,000,000,000). In the event that any Accounting Change shall occur which would have resulted in the Financial Covenant not having been set at the same cushion to Consolidated EBITDA for the most recent Test Period then ended prior to such Accounting Change, then the Financial Covenant shall be recalculated to maintain such cushion; provided that, for the avoidance of doubt, and notwithstanding the foregoing, in no event shall the Financial Covenant be adjusted to a level below 8.30 to 1.00.
Financial Covenant. The ratio of (a) Consolidated Indebtedness to (b) Consolidated Capitalization shall be less than or equal to 0.65 to 1.0 as of the last day of any Fiscal Quarter.
Financial Covenant. The Borrower will not permit the ratio of (i) its Consolidated Indebtedness to (ii) its Consolidated Total Capitalization to exceed 0.65 to 1.0 at any time.
Financial Covenant. So long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder, the Borrower will maintain a ratio of Consolidated Debt to Consolidated Capital, as of the last day of each March, June, September and December, of not greater than 0.675 to 1.000.
Financial Covenant. (a) Subsection (c) of Section 7 of the Loan Agreement is hereby amended to read as follows:
Financial Covenant. The Borrower will maintain, as of the last day of each fiscal quarter, a ratio of Consolidated Debt for Borrowed Money to Consolidated EBITDA of the Borrower and its Subsidiaries for the four quarters then ended of not more than 3.0 to 1.