Financial Covenant Provisions published23 October 2006
The Loan Market Association recently published a series of financial covenant provisions for use with the LMA leveraged primary document, first launched in January 2004.
The provisions relate to leverage, interest cover, cashflow cover, capital expenditure and excess cashflow and are the result of work undertaken by a specific Working Party comprising leading lending institutions and law firms. They are intended as a starting point for negotiations between borrowers and lenders and include a number of options. A Users Guide has also been published to accompany the provisions.
Clare Dawson (LMA Executive Director) said:
"When the leveraged document was first published, it was decided not to include financial covenants in view of the perceived difficulty in finding a commonly agreed format. However, with the rapid ongoing development of the leveraged loan market, it became clear that the project was feasible, and we are happy to make the provisions available to the membership."