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B. Riley FBR Entercom Downgrade

R

rbc

The B. Riley FBR Entercom downgrade note from the 7'th sounded pretty gloomy. It highlighted a maintenance covenant that they are a party to. It seems like their portfolio of sports rights and fixed costs has something to do with it? Is anyone familiar with what the maintenance covenant is?
 
A maintenance covenant requires the borrower to maintain a certain level of activity. Example:
The borrower must maintain a debt to ebitda ratio of less than 5.0x
The ratio will be tested for compliance on a quarterly basis
If the borrower is not in compliance, they are in default
 
Ah, ok. It seems to me that the COVID-19 outbreak is such an extraordinary occurrence, that perhaps they can use that to secure covenant relief. They do seem to have a lot of debt.
 
Chances are there is going to be a lot of Force Majeure examples in effect. Probably one of the few times in business where it actually applies.
 
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