Net Debt / EBITDA Covenant
Short definition
A net debt/EBITDA covenant requires leverage not to exceed a cap. The cap is not a universal “3x”; sector, collateral and lender policy write it.
Detailed explanation
The net-debt definition (leases, factoring, cash), adjusted EBITDA and LTM versus period are locked in the pack. Forward EBITDA is usually not accepted in a maintenance test.
Used with DSCR: green leverage and red DSCR is a cash problem. IFRS 16 breaks both the cap and the definition.
Why it matters for the CFO
Dividend lock-ups and acquisition capacity hang on this cap. The add-back fight is the headroom fight.
How it is calculated
Test: Net borç / FAVÖK ≤ Tavan (tavan paket ve kredi politikasına göre değişir)
Variables in the formula
- Max leverage: Contractual maximum net debt/EBITDA
How to read it
Cap 4.0x, actual 3.5x → 0.5x headroom. 4.0x is not “safe leverage”; it is that pack’s cap.
Numerical example
Net debt 420, EBITDA 120, cap 4.0x → ratio 3.5x, headroom 0.5x.
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What to learn next
Definitions are educational. They are not investment, credit or tax advice.