<An aside: If you put yourself in a position to where you might actually have to take a margin call…..I hope you know what you’re doing. I’ve traded a lot, and I’ve never traded equity on margin. Never will. To me, you’re taking on credit exposure along with fixed price equity exposure. The rate of return on the equity hold needs to be downright silly to pull that off. In other words, an ‘uncommon’ event>
Being in breach of debt covenants isn’t a happy place, so creditors and $FIRE agreed to re-shape the field. It removes an existing guardrail (no fixed charge ratio testing for 2 years) in exchange for two more immediate ones (EBITDA & liquidity), attaches a 75 basis point interest hike, and both the revolver and overall size of the facility were reduced. Lenders also waived the need for $FIRE to retain restricted cash on the balance sheet against their loans.
Then they took that cash and applied it against their loan.
Lender housekeeping at any rate. $FIRE signalled an interesting tone in announcing this. I don’t think I’ve heard CEO/President Beena Goldenberg quoted before, but there’s definitely an acknowledgement in here about their past….along with a flag plant about their future:
It’s the right tone to take. And it’s time to execute.
The preceding is the opinion of the author, and is in no way intended to be a recommendation to buy or sell any security or derivative. The author holds no position in $FIRE
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