Structuring Financial Covenants, EBITDA, and Events of Default to Maximize Borrower Protection and Lender Remedies

Recording of a 90-minute CLE webinar with Q&A


Conducted on Thursday, October 26, 2017

Recorded event now available

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Program Materials

This CLE webinar will provide borrowers’ and lenders’ counsel with a review of the use of EBITDA, leverage ratios and other metrics in loan documentation and financial covenants. The panel will outline key issues relating to structuring financial covenants, related definitions and events of default provisions in commercial loans.

Description

Negotiating the definition of EBITDA and related financial covenants is a matter of intense client focus. Sophisticated clients rely on counsel to provide knowledgeable support on EBITDA and negotiating relevant covenants.

Strategically crafted loan covenants and default provisions can provide the borrower with flexibility to operate its business and the lender with adequate protection and remedies.

Uncertainty or lack of clarity regarding drafting financial covenant and events of default provisions may result in costly disputes. Carefully structured credit agreement provisions can minimize disagreements among the parties.

Listen as our authoritative panel of finance practitioners discusses trends in the use of EBITDA in loan documentation and financial covenants, and event of default provisions in commercial loans.

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Outline

  1. Purpose of financial covenants
  2. Types of financial covenants
  3. Financial definitions—net income, EBITDA, fixed charges, other
  4. Covenant-lite transactions
  5. Financial information in credit agreements
  6. Distinctions between cash flow and asset backed loans
  7. Mandatory prepayments—excess cash flow
  8. Defaults/events of default
  9. Equity cure rights

Benefits

The panel will review these and other key issues:

  • At what stage in the documentation process should EBITDA be negotiated?
  • What are borrowers’ and lenders’ best tactics for proactively mitigating risk when negotiating and drafting financial covenants?
  • How can the borrower and lender each minimize risk when drafting or relying on default provisions?

Faculty

Bursky, Daniel
Daniel J. Bursky

Partner
Fried Frank Harris Shriver & Jacobson

Mr. Bursky concentrates his practice on corporate finance and securities law, representing both issuers and...  |  Read More

Nahr, J. Christian
J. Christian Nahr

Partner
Fried Frank Harris Shriver & Jacobson

Mr. Nahr represents investment banks, private equity sponsors, hedge funds and corporations in a broad array of complex...  |  Read More

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