Do you know the specifics of this ICR? I can see in the annual report that it's written capitalised so I imagine it refers to some specific term in the loan contract that has a definition but from what I can see in general ICR is EBIT/Interest. I understand what you're saying that maybe the inventory write-down is excluded because from their FY21 annual report EBIT was negative but they say they still complied with the covenant.
I understand that if a company's ICR is impacted by say an acquisition and its related costs then those truly one-off costs that may cause a breach of covenant can be excluded from the calculation but where is the line to stop abuse of any possible exclusions? Surely there has to be some line somewhere for what can and can't be excluded from the calculation to avoid such abuse.
Do you know the specifics in the case of MCP or do you have corporate loan industry experience as to how the contracts are worded? Because for the most part in public reports they don't get specific about how each covenant is structured and what does/doesn't count towards its calculation and it's kind of opaque. It would be good to get more insight into the inner workings that aren't always provided in the public statements.
MCP Price at posting:
86.0¢ Sentiment: None Disclosure: Not Held
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