Since the start of April, LCD has captured almost 318 transactions in which U.S. loan issuers have relieved financial covenants under their credit facilities amid the coronavirus pandemic, which has upended the asset class and economies worldwide. Many of these activities have included suspending and/or waiving financial maintenance covenant tests for at least a year, readjusting financial maintenance covenants after that covenant holiday, and adding other covenants, such as minimum liquidity requirements. Several borrowers have also recently extended the original waiver period they obtained at the beginning of the pandemic to further relieve the strain. LCD will periodically update this tracker as warranted by the market.
Some of the recent additions to the covenant-relief tracker (the xls is available to LCD Research subscribers) include Ashford Inc., Carnival Corp., Sunstone Hotel Investors Inc., Ryman Hospitality Properties Inc., Bowlero Corp., Vail Resorts Inc. and TripAdvisor Inc. Below is a summary of those changes:
Ashford Inc.
- Waives failure to comply with leverage ratio covenant for the fiscal quarters ending June 30, 2020 and Sept. 30, 2020.
- Waives and eliminates pre-distribution fixed charge coverage covenant (replacing it with fixed charge coverage ratio set at 1.2x commencing with fiscal quarter ending March 31, 2023.)
- Waives covenants to make timely payments of principal and interest on debt for the month ending Dec. 31, 2020.
- Increases pricing.
Carnival Corp.
- Increases the ratio of debt to capitalization from the testing date on Nov. 30 to Feb. 28, 2024, expanding the limit of the debt to capitalization ratio.
- Introduces new financial covenants: a minimum liquidity covenant from the testing date on Feb. 28 to Nov. 30, 2022, and a minimum interest coverage covenant from the testing date on Feb. 28, 2023, for the remainder of the term of the facility.
- Requires the company to adhere to certain negative covenants and restrictions until Nov. 30, 2024, including, but not limited to, limitations on debt, liens, investments and restricted payments.
Sunstone Hotel Investors
- Extends suspension of all original financial covenants through March 31, 2022, from June 30.
Ryman Hospitality Properties
- Extends waiver period through April 2022 from April 2021.
Bowlero
- Waived first-lien leverage covenants until period ending March 2022 concurrent with its issuance of the $150 million sponsor-supported revolver.
- During the waiver period, Bowlero is subject to a $20 million minimum liquidity covenant and, following the waiver, will be subject to a 6x first-lien net leverage covenant.
Vail Resorts
- Sets maximum leverage ratio at 6.25x (eliminates step downs to 5.75x, 5.25x and 5x).
- Establishes senior secured leverage ratio set at 4x after waiver period.
TripAdvisor
- Extends suspension period of the maximum leverage covenant through maturity (from Sept. 30) if borrowings exceed $200 million.
- The company can also elect to cancel the suspension period.
- Retains minimum liquidity covenant.
The data in the Covenant-Relief Tracker is mostly sourced from LCD News reporting and SEC filings. It is not an exhaustive list of all covenant-relief activity.
