I've invested through three bear markets (2000-2001, pharmaceuticals 2002-2004 and 2008-2009). Lots of scars as my list of mistakes is long and distinguished. Sharing some lessons that may be helpful, even if not original.https://medium.com/@gavin_baker/thoughts-on-navigating-a-bear-market-65cb719b4843 …
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Sometimes, but more often some vague verbal reference to it is made to them rather than the actual legal text you might need to calculate them
Calculate them? I thought covenants specified what assets would go to the bank should the debtor default?
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Well, no, a covenant is a performance agreement between lender and borrower. As part of a loan legal arrangement a security agreement might describe what assets secure, or provide collateral for the loan.
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Ah, so the covenant basically determines when collateral can be seized, for example? Thank you.
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For example in reference to the initial tweet of this thread, perhaps a lender agrees to provide a credit facility as long as the borrower's funded debt is equal to or less than 3X EBITDA.
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Got it, thank you for the example.
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Now as a further example as to why it would be nice to have the full legal text, what is exactly included in EBITDA? I mean one could reasonably exclude unrealized gain on asset from earnings for example
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