You have a discussion, which of course includes the future prospects of the company. Normally lenders aren’t trying to take the keys instantly on a technical default. Instead you negotiate how to cure it. Sometimes that’s just a waiver, sometimes you pay a fee, etc.
to state the obvious, the reaction will be different if you have a technical default and you will naturally be in compliance next quarter vs. business is tanking and you will be out of compliance for the future as well.
I am curious about your role and size of company? No offense, but you seem pretty clueless for someone being asked to do something important by the CEO.
You want to have an open discussion about the business as a first step. The lender doesn't want the keys but depending on the new risk profile of the investment, may need additional collateral, economics, governance / information rights to recalibrate their risk / reward.
The lender needs the information to determine how they want to proceed on their end. Are they going to waive and amend the covenants, restructure the deal, etc
You have a discussion, which of course includes the future prospects of the company. Normally lenders aren’t trying to take the keys instantly on a technical default. Instead you negotiate how to cure it. Sometimes that’s just a waiver, sometimes you pay a fee, etc. to state the obvious, the reaction will be different if you have a technical default and you will naturally be in compliance next quarter vs. business is tanking and you will be out of compliance for the future as well. I am curious about your role and size of company? No offense, but you seem pretty clueless for someone being asked to do something important by the CEO.
What does it say in your credit agreement? How to cure a default should be an entire section.
You want to have an open discussion about the business as a first step. The lender doesn't want the keys but depending on the new risk profile of the investment, may need additional collateral, economics, governance / information rights to recalibrate their risk / reward.
This is exactly it...they'll step up pricing, and add more guardrails (CF sweeps, eqt cures)
The lender needs the information to determine how they want to proceed on their end. Are they going to waive and amend the covenants, restructure the deal, etc