Overview This Practice Note seeks to explain some of the key characteristics of covenant loose and covenant lite financings and assesses some of the risks investors in these facilities may be exposed to. This Practice Note assumes a certain level of knowledge of leveraged finance terminology and documentation. For introductory information on leveraged finance financial covenants, see Practice Note: Leveraged finance—financial covenants. For an introductory guide to acquisition finance, see Practice Note: Introductory guide to acquisition finance. The Glossary of acquisition finance terms and jargon may also be helpful. Terminology Traditional 'covenanted' facility European leveraged facility agreements traditionally include a suite of financial covenants to monitor the borrower-group's financial performance against a base case financial model. The full suite typically comprises the following covenants: • Leverage—this is the ratio of the group's total [net] indebtedness to its earnings before interest, tax, depreciation and amortisation (EBITDA). The leverage ratio is a measure of the group's indebtedness compared to its ordinary operating profit; the higher the ratio the more indebted the group and the greater the perceived

Covenant loose typically refers to a facility agreement where the financial covenant position has been materially weakened from the traditional position of four maintenance covenants (leveraged ratio, cashflow ratio, interest cover ratio and limits on capital expenditure) with limited headroom and quarterly testing (eg by the removal of one or more covenants, by increasing the headroom or by reducing the frequency of testing).

An amendment of the covenant, usually to loosen its terms during a restructuring.

A covenant that runs with the land is a promise about how land is used or maintained that, once properly created, binds successors in title and benefits successive owners of the benefited land, rather than remaining personal to the original parties. In practice this most commonly refers to a restrictive covenant: a negative obligation that “touches and concerns” the land and is intended to bind successors, with notice/registration to protect it (e.g. per Tulk v Moxhay). Positive covenants affecting freehold land generally do not bind successors in England & Wales, Northern Ireland or Ireland, save via limited techniques (chain of indemnity, benefit and burden, estate rentcharges in England & Wales) or specific statutory schemes. By contrast, many leasehold covenants run with the land between landlord and tenant on assignment; in England & Wales this is governed by the Landlord and Tenant (Covenants) Act 1995. In Scotland, the equivalent concept is a real burden under the Title Conditions (Scotland) Act 2003, which can be positive or negative and binds successors when validly constituted and registered. In Ireland, common law principles are broadly similar to England & Wales for freeholds, with modernisation under the Land and Conveyancing Law Reform Act 2009 and sectoral regimes (e.g. multi‑unit developments).

One of the initial signs of distress is usually a covenant breach by the company. The lenders may agree to a simple waiver, which cures a temporary blip in the company's performance, or it may signal the need for more extensive restructuring to come. It will be crucial to check how often the covenants are tested and if the company is not expected to pass the next covenant test, a covenant waiver may be appropriate. Options A covenant waiver or reset is a less extreme form of restructuring than the following options: • equity injection (in return for which, the equity provider usually seeks a covenant holiday or loosening of covenants) (see Practice Note: New money and equity injections in a restructuring situation) • sale of non-core assets • refinancing by new lenders • debt restructuring (see Practice Note: Debt waivers, extending maturity and debt rescheduling) • debt for equity swap (see Practice Note: Debt for equity swaps) Sometimes the waiver is enough to allow the company to get through an isolated patch of

Used to describe security granted around 2006/2007 which was fairly light on the usual covenants lenders previously insisted on.

This Practice Note describes the main covenants that are typically included in high yield notes but which also appear in nearly all high yield transactions, including acquisition financing, corporate issuances and dividend recapitalisations. What are high-yield bond covenants? The general purpose of high-yield bond covenants is to preserve the position of bondholders in the capital structure relative to other creditors and reduce or eliminate value leakage outside of the issuer and its restricted subsidiaries (collectively referred to as the 'restricted group'). High-yield bond covenants achieve those key goals by restricting certain types of activities by the restricted group and they are generally only triggered when the entities bound thereby take certain specified corporate actions (including, eg incurrence of additional indebtedness, dividend distributions and assets sales). The high-yield bond covenants are therefore also known as 'incurrence' covenants. Unlike a typical European senior bank facility, high-yield bond covenant packages will normally not require the issuer to maintain compliance

This Practice Note explains what covenants are and their use and purpose in debt capital markets transactions. It also explains some of the typical covenants included in the documentation for an issue of debt securities. What is a covenant? Covenants, or undertakings as they are sometimes called, are promises to perform or not perform certain actions. A promise to do something is known as a ‘positive covenant’. A promise not to do something is known as a ‘negative covenant’. The use and purpose of covenants in debt capital markets transactions In debt capital markets documentation, as in finance documentation generally, covenants are used: • to ensure that the obligor provides information required for monitoring purposes (information covenants) • to set financial targets for the obligor (financial covenants), and • to set the parameters within which the obligor must run its business and deal with its assets and impose other ongoing obligations on the obligor (general covenants) In addition, an obligor's agreement to repay the debt and, if applicable, to pay interest

CASE HUB ARCHIVED—this archived case hub reflects the position at the date of the Commission’s decision to accept commitments on 17 July 2025; it is no longer maintained. See further, timeline Case facts Outline European Commission (Commission) Article 102 TFEU investigation into whether Corning abused its dominant position by concluding anti-competitive exclusive supply agreements with mobile phone manufacturers and with companies that process raw glass (AT.40728). Latest development On 17 July 2025, the Commission accepted amended commitments from Corning (see details below), and therefore closed its investigation. Parties • Corning Inc (Corning): Corning, based in the US, is a global glass producer for many industrial and consumer applications. Background On 6 November 2024, the Commission launched its investigation.Corning offered initial commitments to the Commission and, on 25 November 2024, the Commission launched a market test of those initial commitments (see details below). Markets Alkali-aluminosilicate glass (Alkali-AS Glass).Alkali-AS Glass is a particularly break-resistant glass mainly used as cover for displays of portable electronic devices such as mobile phones,

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