equity cure right


equity cure right
USA
A provision that may be agreed to in certain loan agreements that permits the financial sponsor (or a parent company) to transfer cash to the borrower (generally within 10 days after delivery of financial statements) to increase the amount of EBITDA for purposes of determining compliance with the financial covenants (but for no other purpose). This transfer may be in the form of a cash contribution to the borrower or the purchase of equity in the borrower.
Lenders agreed to this provision at the request of financial sponsors prior to the financial crisis but were less willing to permit the equity cure right as of the end of 2009.

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

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