Finance & AccountingFree
Loan Agreement EBITDA Definition Extractor
Every covenant restated in the agreement's own defined terms, with the section behind each add-back and the caps solved rather than guessed.
River's covenant extractor reads the credit agreement and every amendment, then restates each financial covenant in the agreement's own defined terms. What comes back is a definitions document with the section reference behind every add-back and every exclusion, and a calculation skeleton wired to those definitions rather than to a textbook formula. Each capped add-back carries the clauses it shares its cap with, the arithmetic that resolves the cap, and the line of the agreement the cap is written on.
Every guide on this query gives the same instruction: copy the definition, list the add-backs, apply the caps. The definition is not a list. In a JPMorgan facility, three add-back clauses that are not adjacent share one cap set at twenty percent of EBITDA calculated after giving effect to those same add backs. A cap measured on the number it feeds is an equation, and it resolves to twenty-five percent of the base.
Written for the controller or CFO signing a compliance certificate, and for the analyst rebuilding a model after a refinancing. It reads alongside the lender reporting package, which is where the certificate and the register live, and takes the figures from the normalized trial balance the close produced. A covenant that turns on cash rather than earnings gets tested against the 13 week cash flow forecast. The figures themselves come out of the month end close checklist, which is where the trial balance gets locked before anything is certified.
One word moves the answer by a quarter
Both conventions are in the market at the same headline number. A BMO facility amended in 2024 caps two add-back clauses at twenty percent of Consolidated EBITDA measured before giving effect to those add backs. Same twenty, opposite direction, twenty-five percent more room under the first. On the numbers in the worked example that is 791,250 of EBITDA, and it is the difference between certifying 2.95 times and reporting a breach at 3.07.
The definitions also reach outside the document. The same JPMorgan facility requires the leverage ratio to be computed on a pro forma basis for any acquisition or disposition, on a basis consistent with Article 11 of Regulation S-X as interpreted by the SEC. So the standard governing half the arithmetic sits in a federal regulation the credit agreement never reproduces, and the extract carries it in. The accounting basis moves too, since a change in GAAP freezes the affected provision at the old treatment the moment either party asks for an amendment.
Add-backs also carry exclusions and expiry dates. Non-cash charges go back in, except a non-cash write-down of inventory, which is the one every preparer reaches for first. Insurance proceeds expected within 365 days go in now and come back out later if the money never lands. And because the cap scales with the base, a 780,000 add-back that should not be there costs 975,000 of EBITDA, so the error grows on its way through.
How it works
Add the agreement
Paste or attach the credit agreement and every amendment, however many pages they run to.
Name the covenants
Say which tests you certify, or let the agreement's own compliance certificate decide the list.
River resolves the definitions
Every defined term is followed to the bottom and every cap is solved, with sections cited.
Fill the skeleton
Drop the period's figures into the calculation sheet and certify a number you can point at.
What you get
- Every covenant restated in the agreement's own defined terms, with the section reference on each line
- Shared caps resolved across every clause that draws on them, not applied clause by clause
- Circular caps solved as equations, since a percentage of the number it feeds is not a lookup
- Nested defined terms followed to the bottom, so a ratio resolves before anyone types a number
- Add-backs that reverse in a later period flagged with the date their reversal lands
- A calculation skeleton wired to the definitions, so next quarter is the same arithmetic
Common questions
Why is covenant EBITDA different from the EBITDA in my board pack?
Because it is a contractual term, not an accounting one. The agreement names which charges go back in, which are excluded even though they look identical, and what the ceiling is on the discretionary ones. Two honest analysts working from the same income statement land on different numbers when they read those clauses differently.
What does a shared cap across clauses actually change?
It turns three independent allowances into one. In the worked example clauses seven, eight and twelve claim 4,310,000 between them against a single ceiling of 3,956,250, so 353,750 is disallowed. Read clause by clause, none of the three breaches on its own and the entire amount goes in.
How do I know whether my cap is measured before or after the add-backs?
The clause says so, in five words most people read past. Both conventions are live in filed agreements at the same headline twenty percent. Measured after, the ceiling resolves to twenty-five percent of the base. Measured before, it is twenty. That gap decides compliance more often than the business does.
Does it handle amendments and restatements?
That is the normal case, and stacking order matters. A definition amended twice is read as the last version standing, with the superseded wording kept beside it so you can see what moved. Where an amendment changes a threshold on a schedule, each test date carries the number in force on that date.
Can it do fixed charge coverage as well as leverage?
Yes, and coverage ratios hide more. The numerator and denominator frequently cover different windows, so a trailing twelve month earnings figure gets divided by four and set against a trailing three month charge. Every ratio comes back with both sides dated, because a window mismatch is invisible in the result.
What happens after the definitions are extracted?
The skeleton fills every period from then on, and the certified figure carries the section behind each line. The lender reporting package holds the certificate, the register and the calendar, and the covenant headroom forecast runs the resolved definitions forward to find the quarter a test fails. Before any of that there is the closing file, which the document request tracker assembles.
Loan Agreement EBITDA Definition Extractor
Fill in the form and your workspace opens with the work already underway.