Unrestricted Subsidiaries and EBITDA Add-Backs (Commitment Letters)

Summary

This practice note examines current developments in commitment letter terms in the middle market and large-cap loan markets. This practice note discusses how issues related to unrestricted subsidiaries that arise in the context of a commitment letter may typically be addressed, keeping in mind that the variety of approaches on issues depend on a number of variables concerning the credit facility. The discussion on unrestricted subsidiaries is followed by a review of issues relating to add backs to EBITDA used in the calculation of financial covenants.