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Limitation on Liens

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Limitation on liens
A bond covenant that restricts in some way a firm's ability to grant liens on its assets.

Limitation on Liens
An aspect of some bonds in which the issuer is only allowed to grant liens on its assets in certain circumstances. A bond with a limitation on liens generally carries lower risk because, in the event of default, the issuer's assets have fewer liens from secured creditors. This means that the bondholders have a higher priority on the proceeds of liquidation.


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The notes contain a change of control provision along with a limitation on liens, sale leasebacks, and mergers and acquisitions.
Similar to TRI's recent bond offerings, the new notes include 1) a limitation on liens over 10% of Shareholders Equity, excluding standard carve-outs, 2) a put should a change of control (at 50% of voting shares) and downgrade below investment grade (as defined) occur and 3) a cross-default in the event of non-payment of principal greater than 3% of Shareholders Equity.
The security package does not include real property, likely as a result of the limitation on liens covenant in LLC bonds.
 
 
 
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