Covenant analysis

Rebuild each maintenance covenant from the credit agreement's own definitions and show the headroom at every step down. Every term tied to its section

Customize this Agent

XLSXDOCX14 steps

The problem

Three step downs in three quarters, and the filings say only that it complies

Fortrea's Total Leverage Ratio covenant steps down from 6.00x at June 30, 2026 to 5.75x, 5.50x and 5.30x by March 2027, and no filing discloses the ratio. The agreement's Consolidated EBITDA adds back run rate cost savings up to 25% of EBITDA. Take the release's adjusted EBITDA as the covenant figure and every headroom number comes out too tight, since the release takes none of those savings

The request

Covenant analysis on Fortrea (FTRE), June 2023 credit agreement through Amendment No. 2. Compute the Total Leverage and Interest Coverage Ratios at June 30, 2026 as defined, not from the release's adjusted EBITDA. Show headroom at every step down through March 2027, as EBITDA cushion and debt capacity, apart from the baskets Amendment No. 2 tightened. Our model, attached, stands in for September 30, December and March, with projected cash. Tell me who the covenants protect, the term loan A and revolver maturities and take out cost, cure rights, breach consequences and the likely cost of a third amendment against the second. Cite the section for every definition and flag add backs that depend on the compliance certificate.

FTRE model.xlsx

How Axe works

ApprovedChanges asked

Your reviewApprove, or say what to change

Approved or changes

Workbook and memoApproved workbook, memo and tie out

Final reviewApprove the revised files

Revised workbook and memoRevised files and tie out

Step

Rebuild covenant earnings

Prompt

Sent to the model at this step

Build Consolidated EBITDA for each of the four quarters in the latest test period, starting from net income as the agreement defines it, not from the company's adjusted EBITDA. Take each figure from the 10-K, 10-Q or release, with page and line. Map every add back to the clause that permits it. Show any item the company adds back that the agreement does not permit, and any item the agreement permits that the company does not add back. Apply each cap in the order and on the base the definition sets, and show the amount the cap cuts off. Where an add back depends on figures only the borrower reports to its lenders, such as run rate cost savings or public company costs, do not estimate it: show the result with and without it and list it as open. Include or exclude acquired and disposed businesses as the pro forma rules require. Reconcile the result to the company's adjusted EBITDA line by line.

Uses

Test date
Document register
Definitions

Produces

EBITDA build

What you get back

XLSXCovenant workbookDefinitions by section, EBITDA and debt builds, ratios and headroom at each test date

DOCXCovenant memoCompliance first, then take out cost, breach terms, cure rights and amendment pricing

Tie out reportEach figure and citation marked tied, corrected or open

Make it yours

Point it at another borrower, add a fixed charge or senior secured leverage test, or set the cushion your desk flags. Every step and every prompt can be edited

Customize this Agent

Opens a private copy of this Agent in your workspace, ready to adapt to your own sources

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