Finance

Debt Covenant – How Does It Work? • Specific "baskets" or exceptions are available ("Basket Debt"): • Permitted Debt – debt that can be incurred without satisfying the ratio test • Permits normal operations through necessary ordinary course debt • In a negotiation, examine the model (to figure out future ratio capacity) and the business plan (to ensure future needs are addressed) The Debt Stack – Structuring and Incurrence Covenants 18

• An Introduction to Leveraged Finance
• Agenda
• Opening Remarks
• Slide Number 4
• Introduction
• Debt stack
• Restricted vs. Unrestricted Subsidiaries
• Restricted vs. Unrestricted Subsidiaries (cont.)
• Typically, who is Restricted?
• Subordination
• Structural Subordination
• Lien/Effective Subordination
• Contractual Subordination
• Typical subordination scenario
• Covenants: Incurrence v. Maintenance
• Purpose of Covenants
• Debt Covenant – Basics
• Debt Covenant – How Does It Work?
• Debt Covenant – How Does It Work? (cont.)
• Debt Covenant – How Does It Work Under Various Instruments?
• Limitation on Restricted Payments – Purpose
• Limitation on Restricted Payments – Carve-outs
• Restricted Payments Covenant – How Does It Work under Various Instruments?
• Understanding HY covenants within Loan Documents
• Financial Statements – The Basic Requirements 
• What Financial Statements Are Required in an OM?
• What Financial Statements Are Required in an OM? (cont.)
• What Financial Statements Are Required in an OM? (cont.) (1)
• Financial Statement Requirements for Acquisitions
• Financial Statement Requirements for Acquisitions (cont.)
• Financial Statement Requirements for Acquisitions (cont.) (1)
• Financial Statement Requirements for Acquisitions (cont.) (2)
• Financial Statement Requirements for Acquisitions (cont.) (3)
• Financial Statement Requirements for Acquisitions (cont.) (4)
• Financial Statement Requirements for Acquisitions (cont.) (5)
• Financial Statement Requirements for Acquisitions (cont.) (6)
• Financial Statement Requirements for Acquisitions (cont.) (7)
• Financial Statement Requirements for Acquisitions (cont.) (8)
• Financial Statement Requirements for Acquisitions (cont.) (9)
• Non-GAAP Financial Metrics
• Non-GAAP Financial Metrics (cont.)
• Non-GAAP Financial Metrics (cont.) (1)
• Non-GAAP Financial Metrics (cont.) (2)
• Recent/Upcoming Developments
• New Environmental/Climate-Change Disclosures Expected in 2023
• Commitment Papers — The Basics
• Timeline of an Acquisition Financing
• Types of Mandate
• Process
• Commitment Papers – The Documents
• Commitment Letter – Conditions to Commitment
• SPA – Key Points
• TSM/Model
• Additional Commitment Letter Considerations
• Termination of Commitment
• Term Sheet
• European Certain Funds
• Syndication Strategy
• Fee Letters
• Other Provisions in Fee Letters
• Our Team
• Our Team (1)
• Slide Number 63