Time for Equity

Make sure you are up to date on the latest trends in equity cure rights in credit agreements. This practice note discusses current market trends in publicly filed credit agreements from the second half of 2020 and first half of 2021. Equity cure rights permit an investment of cash in the borrower—typically made by a holding company, sponsor, or other shareholder—to allow the borrower to comply with financial maintenance covenants in the credit agreement, thus preventing or repairing a breach of that covenant.  

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Related Content

• Events of Default Resource Kit
  Refer to this resource kit for an overview of events of default in credit agreements.

• Financial Covenants and EBITDA Calculations in Credit Agreements
  Check out this practice note, which describes the use of financial covenants in credit agreements. It also discusses how EBITDA is defined in a credit agreement, which is a critical factor in calculating a borrower’s compliance with most finance covenants and its ability to incur additional indebtedness.

• Financial Covenants Clauses (Credit Agreement)
  Use this financial covenant clause if you are drafting a credit agreement for a syndicated loan transaction.

• Affirmative, Negative, and Financial Covenants
  Read this practice note for an overview of the covenants found in credit agreements, along with the processes by which loan parties are captured, or not, by those covenants. 

Practical Guidance Updates

Featuring the latest updates from your Practical Guidance account.

• Market Standards—Finance
• Finance Fundamentals Resource Kit
• Understanding the Loan Transaction Video
• The Practical Guidance Journal Summer 2021 Edition, featuring details on the latest LIBOR cessation dates
• Document alerts allow you to stay current on legal developments that affect your practice. Find out how to set up your document alerts.  

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