Public Companies

Bondholder group warns against adding coronavirus to EBITDA

The Credit Roundtable, a bondholder advocacy group, is warning against companies elevating their EBITDA by adding back losses related the coronavirus pandemic.

July 15 (Reuters) - The Credit Roundtable, a bondholder advocacy group, is warning against companies elevating their EBITDA by adding back losses related the coronavirus pandemic.

In an open letter on Wednesday, the group called on regulators and auditors to scrutinize a recent practice by some companies of adding losses caused by the coronavirus into their calculations of earnings before interest, depreciation and amortization, a widely used measure of cash flow and ability to pay debt.

"We believe EBITDAC calculations include many hypothetical, highly subjective, and potentially misleading adjustments," the letter said. "The use of EBITDAC compromises a fundamental assessment of a company’s ability to incur and service debt to the detriment of current and future providers of capital."

The Credit Roundtable's members include MetLife, T. Rowe Price, AIG and the California Public Employees' Retirement System.

(Reporting by Noel Randewich; editing by Diane Craft)

((noel.randewich@tr.com; (415) 677 2542; Reuters Messaging: Twitter: @randewich))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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