Recent Bonds Provide Increased Flexibility to Invest in Unrestricted Subsidiaries

Recent Bonds Provide Increased Flexibility to Invest in Unrestricted Subsidiaries
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In a new special report, Xtract Research highlights a couple of new takes on how to move assets to unrestricted subsidiaries without the use of any RP basket capacity.

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Q1 2021 hedge fund letters, conferences and more

Flexibility to Invest in Unrestricted Subsidiaries

Key points from the report include:

Qualivian Investment Partners 2Q22 Investor Letter

TD1655 Newsletter Placement 1Dear Friends of the Fund, Please find enclosed our Q2 2022 investor letter for your review.  Qualivian reached its four-year mark in December of 2021. We are actively weighing investment proposals. Please refer to our Q2 2022 investor letter for our performance and commentary on the second quarter of 2022. A fact sheet is 

Permitted Business Investments So Long as $1 Of Ratio Debt Can be Incurred: This is a variation seen in bonds of a few issuers in the oil and gas sector. Most bonds in this sector permit uncapped investments in “permitted business investments” which are typically investments made in the ordinary course or are customary in a Permitted Business and are related to exploring, developing, etc. oil and gas assets.

A few issuers in the sector, including Antero Midstream and Precision Drilling have, for several years, included a far broader provision.

Had PetSmart and Neiman Marcus had such a provision, if their ratio debt tests could have been met, they could have unrestricted Chewy and MyTheresa, respectively, with less concern about basket capacity or pesky investor challenges.

Earlier this year Trinseo took ratio investments to the next level: unlimited investments so long as the pro forma coverage ratio is at least 2.25x (as opposed to a typical total leverage ratio test for ratio investments) OR the pro forma coverage ratio is no worse.

At Home Group’s recent notes provide it with maximum flexibility, essentially combining all of the above: unlimited investments in anything - including unrestricted subsidiaries - are allowed subject to meeting a 5x Consolidated Total Debt Ratio or a 2x FCCR or those ratios are not worse than prior to the transaction.

Jacob Wolinsky is the founder of, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at) - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver
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