Synthetic covenant-aware planning — public financial workings

Fictional company: Demo Holdings consolidated reporting group
Currency: USD
Opening balances: 30 September 2026
Payment decisions: 1 October through 31 December 2026
Projected contractual covenant test: 31 December 2026
Repayment and liquidity follow-through: 31 January 2027

All records, assumptions and attestations were created for this synthetic
demonstration agreement and planning annex. No external legal or financial
review is claimed. This selected public excerpt is not the complete retained
record and does not independently establish approval.

REVIEWED SYNTHETIC ASSUMPTIONS

Opening existing debt                         USD 18,000,000.00
Opening total cash                             USD 3,000,000.00
Restricted cash throughout                     USD 1,000,000.00
Opening unrestricted cash                      USD 2,000,000.00
Minimum unrestricted closing cash                USD 500,000.00
Collection on 30 November                      USD 3,000,000.00

Base EBITDA is USD 1,000,000.00 in each discrete 2026 quarter. Q1-Q3 use
synthetic historical accounts and Q4 uses a reviewed synthetic forecast.
The rolling calculation drops 2025Q4 and includes forecast 2026Q4.
An eligible Q3 restructuring expense of USD 1,200,000.00 was already
deducted from historical EBITDA. The cap is 25% of positive base EBITDA,
rounded down to the nearest cent. Forecast expenses and future addbacks
are outside scope.

Base EBITDA                                    USD 4,000,000.00
Permitted restructuring adjustment             USD 1,000,000.00
Adjusted EBITDA                                USD 5,000,000.00
Maximum cash deduction from debt                USD 2,000,000.00
Net leverage limit                                        3.50

The cash deduction is unrestricted cash up to the stated cap. Net debt
cannot be negative. Divide net debt by adjusted EBITDA and use the exact
ratio to decide the outcome. Display rounding is half-up to two decimals.

One supplier invoice has face value USD 3,000,000.00 and these permissions:
  1 October:  settle USD 2,900,000.00; discount USD 100,000.00.
  30 November: settle USD 2,950,000.00; discount USD 50,000.00.
  31 December: settle USD 3,000,000.00; discount USD 0.00.

New borrowing is either explicitly zero or a quoted USD 2,000,000.00 loan,
drawn on 1 October and fully repaid on 31 January. The loan costs
USD 30,000.00 on 31 December plus USD 10,000.00 on 31 January.
Existing debt principal remains unchanged. Existing interest is
USD 180,000.00 on 31 December plus USD 60,000.00 on 31 January:
USD 240,000.00 in total. All other cash flows are explicitly zero.

The objective is new borrowing interest through repayment less supplier
discounts. Existing interest remains in cash and full interest reporting.
Principal is a cash flow, not an economic benefit. For this synthetic
annex only, selected discounts and financing interest are excluded from
contractual EBITDA. Do not infer this treatment for real agreements.

On each event date apply restriction changes, receipts and draws before
operating and supplier payments, interest and principal repayments.
Check facility exposure before repayments and unrestricted closing cash
afterward. Intraday liquidity is excluded. Test the covenant after all
31 December events; January is a repayment and liquidity check only.

RESULTS RETAINED FROM THE LOCAL SYNTHETIC DEMONSTRATION

October borrowing baseline
  1 October unrestricted closing cash:
    USD 2,000,000.00 + USD 2,000,000.00 - USD 2,900,000.00
    = USD 1,100,000.00.
  30 November after the collection: USD 4,100,000.00.
  31 December after existing and new interest:
    USD 4,100,000.00 - USD 180,000.00 - USD 30,000.00
    = USD 3,890,000.00 unrestricted cash.
  31 January after remaining interest and new-loan repayment:
    USD 3,890,000.00 - USD 60,000.00 - USD 10,000.00 - USD 2,000,000.00
    = USD 1,820,000.00 unrestricted cash.
  Minimum unrestricted cash: USD 1,100,000.00, above the floor.
  Quarter-end gross debt: USD 20,000,000.00.
  Cash deduction is capped at USD 2,000,000.00.
  Net debt USD 18,000,000.00 / EBITDA USD 5,000,000.00 = 18/5 = 3.60.
  Result: covenant breach despite adequate closing liquidity.
  Discount USD 100,000.00 less new interest USD 40,000.00
    = USD 60,000.00 modeled benefit.
  Full borrowing interest: USD 280,000.00.
  Full borrowing interest less supplier discount: USD 180,000.00.

Selected November payment without new borrowing
  1 October unrestricted closing cash: USD 2,000,000.00.
  30 November, after collection and supplier payment:
    USD 2,000,000.00 + USD 3,000,000.00 - USD 2,950,000.00
    = USD 2,050,000.00.
  31 December after existing interest:
    USD 2,050,000.00 - USD 180,000.00 = USD 1,870,000.00.
  31 January after remaining existing interest:
    USD 1,870,000.00 - USD 60,000.00 = USD 1,810,000.00.
  Minimum unrestricted cash: USD 1,810,000.00, above the floor.
  Quarter-end gross debt: USD 18,000,000.00.
  Cash deduction: USD 1,870,000.00.
  Net debt USD 16,130,000.00 / EBITDA USD 5,000,000.00
    = 1613/500 = 3.226, displayed 3.23: within the 3.50 limit.
  Discount USD 50,000.00 less new interest USD 0.00
    = USD 50,000.00 modeled benefit.
  Full borrowing interest: USD 240,000.00.
  Full borrowing interest less supplier discount: USD 190,000.00.
  Result: lowest-cost permitted plan meeting the stated constraints.

Both plans finish with USD 18,000,000.00 existing debt and USD 0.00 new
debt. The selected plan gives up USD 10,000.00 of modeled net benefit
to satisfy the projected covenant. This is not a claim of total profit
or realized customer savings.

INDEPENDENT FINANCIAL REFERENCE COMPARISON

These six combinations are independent workings from the stated facts,
not six additional observed live runs. "Benefit" means supplier discount
less new interest. "Minimum cash" covers closing unrestricted cash through
31 January. The October and November results above are repeated here only
to show the complete set of choices.

October, no new borrowing
  Benefit USD 100,000.00; quarter-end unrestricted cash USD 1,920,000.00.
  Minimum cash USD -900,000.00 on 1 October: fails liquidity.
  Quarter-end ratio 402/125 = 3.216. Not a feasible plan.

October, USD 2,000,000.00 borrowing
  Benefit USD 60,000.00; quarter-end unrestricted cash USD 3,890,000.00.
  Minimum cash USD 1,100,000.00; ratio 18/5 = 3.60: covenant breach.

November, no new borrowing
  Benefit USD 50,000.00; quarter-end unrestricted cash USD 1,870,000.00.
  Minimum cash USD 1,810,000.00; ratio 1613/500 = 3.226.
  Lowest-cost feasible permitted plan.

November, USD 2,000,000.00 borrowing
  Benefit USD 10,000.00; quarter-end unrestricted cash USD 3,840,000.00.
  Minimum cash USD 1,770,000.00; ratio 18/5 = 3.60: covenant breach.

December, no new borrowing
  Benefit USD 0.00; quarter-end unrestricted cash USD 1,820,000.00.
  Minimum cash USD 1,760,000.00; ratio 809/250 = 3.236.
  Feasible, but more expensive than the selected November plan.
  Workings: USD 2,000,000.00 + USD 3,000,000.00 - USD 3,000,000.00
    - USD 180,000.00 = USD 1,820,000.00 at quarter-end.
    Net debt USD 16,180,000.00 / EBITDA USD 5,000,000.00 = 3.236.
    January interest reduces unrestricted cash to USD 1,760,000.00.

December, USD 2,000,000.00 borrowing
  Benefit USD -40,000.00; quarter-end unrestricted cash USD 3,790,000.00.
  Minimum cash USD 1,720,000.00; ratio 18/5 = 3.60: covenant breach.

OBSERVED REVIEW CONTROLS

An unknown Q4 forecast prevented determination and approval. A conditional
preview using the original forecast showed the October baseline breach
without resolving or approving the uncertainty. Resolving the forecast
required a new review and approval before another approved analysis.

Changing the underlying covenant assumptions made the planning approval
stale and prevented new analysis under it. Excluding the restructuring
adjustment left no feasible plan among the permitted choices. Previously
approved results remained available with their original assumptions and
approval record. Human approval authorized analysis only; it did not
execute payments or borrowing.

SCOPE AND LIMITATIONS

This is a locally demonstrated fictional example, not a customer deployment
or service commitment. Forecasts are assumptions, not guarantees. Missing
facts, unresolved adjustment treatment or nonpositive adjusted EBITDA
prevent determination; they do not establish infeasibility.

The example covers only the stated payment dates, quoted loans, cash flows
and single projected covenant test. Intraday liquidity, refinancing,
additional covenants, foreign currencies, fees and floating rates are
outside scope. Real agreements, legal interpretation, customer data and
production readiness require separate review and qualification.

The public files contain selected financial facts and results, not the
complete retained evidence or an independent reproduction package.
The accompanying unsigned manifest checks only these public files.
