Covenant Cushion Quick Cards
Recall the core covenant cushion checks before accepting debt terms.
Acronym CUSHION What should CUSHION remind you to check in a covenant package? Seven checks before you sign. Calculation · Use of add-backs · Step-downs · Headroom · Information rights · Operating baskets · Notices and cure Compare Headline covenant versus real cushion: what changes the answer? Use the legal definition, not the management dashboard. Covenant cushion is calculated against the test as written. Objection We can accept the covenant; we do not expect to miss plan. Use when the base case passes but downside cushion is thin. Your line Covenants are not written for the base case. Let us…
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