MGP Ingredients Amends Credit Agreements to Add Back Up to $20M in Customer Receivable Losses, Easing Covenant Pressure

summarizeSummary

MGP Ingredients amended its credit agreements to add back up to $20 million in customer receivable losses to EBITDA, easing covenant pressure after a large impairment-driven loss. The company also temporarily raised its maximum leverage ratio to 4.50x.

check_boxKey Events · Financing and Capital Events · MGPI

• Credit Agreement Amendments Provide Covenant Relief

  Amendment No. 2 to the Amended and Restated Credit Agreement and the Eighth Amendment to the Note Purchase and Private Shelf Agreement allow the company to add back up to $20 million in aggregate losses from specific customer accounts receivable to Consolidated EBITDA through December 31, 2027.

• Elevated Leverage Ratio Exercised

  The company exercised its option for an Elevated Ratio Period, increasing the maximum permitted consolidated net leverage ratio from 4.00x to 4.50x for the fiscal quarter ended June 30, 2026 and the next three quarters, tied to earnout obligations for the Penelope Bourbon acquisition.

• Covenant Compliance Protected

  The amendments ensure that uncollected receivables from identified customers do not negatively impact the calculation of the fixed charge coverage ratio (minimum 1.25x) or the net leverage ratio, preventing a potential covenant breach.

• Precautionary Measure Amid High Leverage

  The company described the amendments as precautionary, expecting peak leverage in Q3 2026 before declining. The move follows a $179.5 million impairment charge and a $122.8 million H1 loss, with total debt at $369.6 million.

auto_awesomeAnalysis · MGPI · Trade & Services

To safeguard its financial covenants, MGP Ingredients amended its credit agreements, allowing the exclusion of up to $20 million in losses from specific customer accounts receivable from its EBITDA calculation through 2027. This directly protects the company's ability to meet a fixed charge coverage ratio of at least 1.25x and a net leverage ratio no greater than 4.00x (temporarily raised to 4.50x). The move follows a $179.5 million impairment charge and a $122.8 million H1 loss, and comes as the company expects peak leverage in Q3 2026. While the amendments provide breathing room, they also signal that without this relief, covenant compliance could have been at risk — a material concern for a company with $369.6 million in debt.