3 ms·
The definition of "EBITDA" keeps getting looser each year, so the true leverage is likely somewhat higher than you'd expect by just looking at the max leverage
by berberous 8y ago
The definition of "EBITDA" keeps getting looser each year, so the true leverage is likely somewhat higher than you'd expect by just looking at the max leverage a credit agreement permits.
Also, most leveraged loans (i.e. institutional term B loans) require de minimis principal repayment in addition to interest (1%/year).
- StudentStuff 8y agoAny chance you have a comparison of EBITDA over the years? You've piqued my interest :P
- berberous 8y agoHere's an article that describes the issue: https://www.reuters.com/article/us-ebitda-loans/adjusted-ebitda-masks-higher-leverage-on-buyout-loans-idUSKBN1JW2HU https://www.reuters.com/article/us-ebitda-loans/adjusted-ebi... This article describes some of the addbacks in more detail (scroll down to the section entitled "EBITDA add-backs and other adjustments"): https://www.hoganlovells.com/publications/the-evolving-fiction-of-ebitda-in-the-european-leveraged-finance-loans-market https://www.hoganlovells.com/publications/the-evolving-ficti...
- XnoiVeX 8y agoThat's an eye opener for me. Thanks!