June 2021 Covenants Trends – Americas Covenants by Reorg
Tue Jun 29, 2021 4:46 pm Financial Covenants Analysis

Discussing June 2021 covenants trends, our Americas Covenants by Reorg team analyzed the operation of unsub spinoff baskets with regards to “No Carve-Out” and “Full Carve-Out” versions and how some formulations could present risks for creditors. This covenants trends piece also takes a deep dive into the fact that some unsub spinoff baskets may provide illusory protection to noteholders against the use of investment capacity for dividends through cash spinoffs. 


Our experts discuss how the “Full Carve-Out” version from the unsub spinoff basket prevents all cash spinoff dividends protecting noteholders against a “cash spinoff” dividend in which the issuer uses the unsub spinoff basket to pay what is effectively a cash dividend. Along with that, our experts discuss the “Investments Carve-Out” version and how it prevents the use of investment capacity for dividends and the unsub spinoff basket in Univision notes provides limited protection to noteholders as well as the unsub spinoff basket in Univision’s senior secured notes due 2029 which provides limited protection to noteholders. Read the full June 2021 covenants trends piece here for our deep analysis on each of these situations: https://reorg.com/some-unsub-spinoff-baskets-may-provide-illusory-protection-to-noteholders-against-use-of-investment-capacity-for-dividends-through-cash-spinoffs/ 

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