COVID-19 Coronavirus: Leveraged Finance

As the impact of the COVID-19 coronavirus continues to play out, many entities need to rapidly assess their liquidity availability. As part of that, the UK government has introduced a number of funding and support measures intended to address the potential impact of COVID-19 on businesses operating across a range of industries. There has now been announced the Coronavirus Job Retention Scheme, various business rate and grant reliefs, an extension of the HMRC time to pay tax arrangements, statutory sick pay relief for small and medium sized businesses and deferral of VAT payments.

Read our guidance: UK Government Funding and Other Liquidity Options (UK) - May 25, 2020

As the impact of the COVID-19 coronavirus continues to play out, many entities need to rapidly assess their liquidity availability. As part of that, the UK government has introduced a number of funding and support measures intended to address the potential impact of COVID-19 on businesses operating across a range of industries.

Read our guidance: UK Government Funding and Other Liquidity Options (UK) – April 7, 2020

While the full scope of the potential impact of COVID-19 on financial covenant calculations and other purposes within loan agreements can only properly be assessed on a deal-by-deal basis, it is still possible to identify some of the issues that will need to be considered as part of that analysis.

Read our guidance: The Potential Impact of the COVID-19 Coronavirus on EBITDA and Financial Covenant Calculations in Loan Agreements (UK) – April 6, 2020

For some industries, the immediate loss of revenue is obvious. For other industries, a loss in revenue is likely linked to the disruptions in their supply chain. The expectation is for a significant number of businesses to be negatively impacted by this virus, while it remains to be seen exactly what that will look like.

Read our guidance: What Could It Mean for Your Portfolio Company’s Compliance With Its Loan Agreements? (UK and Europe) - March 24, 2020

Businesses will need to fight to stay afloat as the repercussions of the virus hit hard. Many of these businesses will have existing financing arrangements in place, and the loan agreements for those arrangements will contain provisions impacting what rights their lenders have in reacting to this crisis.

Read our guidance: COVID-19 as an MAE in English Law Loan Agreements (UK) – March 23, 2020

As the COVID-19 health crisis deepens and increasingly rankles the financial markets, private equity sponsors should take the time to review their portfolio companies' credit facilities and determine what flexibility they may have if their performance is adversely affected.

Read our guidance: Action Items for Private Equity Sponsors under Their Portfolio Companies' Credit Facilities (U.S. and Europe) - March 16, 2020