Ratio Covenant

Ratio Covenant

Any covenant in a loan agreement that uses a financial ratio. For example, a ratio covenant may prohibit more than a certain amount of leverage and may use a gearing ratio to determine this.
References in periodicals archive ?
The amended credit facility modifies the leverage ratio covenant (Net Debt/Adjusted EBITDA) so that it increases from 3.
Although PLUS Berhad is not required to maintain a DE ratio covenant, the company's leverage is deemed high for its standalone rating.
The facility also contains amendments to the covenant package including the suspension of the net debt to EBITDA ratio covenant until 1 July 2016 and changes to the balance sheet gearing covenants to make them more appropriate to the Group's projected financial profile through until the completion of Bozshakol.
However it did not reach its target interest to EBIT ratio covenant of 1.
The maximum leverage ratio covenant was amended in the New Credit Facility to allow a total debt to EBITDAX ratio, as defined in the New Credit Facility, of 4.
The amendment revised the net leverage ratio covenant for the remainder of the term of the facility.
Additionally, the senior secured credit agreement, as amended, excludes the notes from the leverage ratio covenant contained therein.
In lieu of redeterminations of the borrowing base (as funds may not be re-borrowed once paid), the Lender will impose a new quarterly debt to EBITDAX leverage ratio covenant, beginning at 5.
Under the amendment, the Company's leverage ratio covenant, (debt to EBITDA), will be increased to 5.
Under the terms of the Amendment, the creditors have agreed to a borrowing base availability at $40 million and to waive the event of default, as well as any current ratio covenant defaults as of September 30, 2014, until the earlier to occur of December 31, 2014 or the closing or termination of the merger of the Company under the terms of the Agreement and Plan of Merger, dated September 17, 2014, by and among EOS Petro, Inc.
The maximum leverage ratio covenant in the Credit Facility was amended, expanding it to total debt to EBITDAX, as defined in the Credit Facility, of 4.
SVB and PFG also agreed to reset the existing liquidity ratio covenant to 1.