Sherwood Financing 4.5% 2026 + 6% 2026 + FRN 2027

§ I

Executive Summary All three maintenance-equivalent covenants are running with meaningful cushion.

3 covenants · 0 breaches · 0 warnings

Covenant	Headline	Current	Threshold	Cushion	Status
Debt Incurrence § 4.09	-7% cushion to the coverage floor	1.85×	>= 2.00×	-8%	Breach
RCF Maintenance Covenants § rcf		—	—	—	Warning
Permitted Liens § 4.12	1 computable · Plus 7 qualitative lien carve-outs (unlimited / existing / refinancing) — standard HY patterns.	$24M	cap	—	In Compliance
Restricted Payments § 4.07	Builder basket + qualitative RP carve-outs	$0M	gross cap	—	In Compliance

At 1.85x, below the 2.00x covenant floor. Covenant Quality scored 2.5/5 (debt 2, liens 3, RPs 3).

§ II

Covenant EBITDA Build-Up Bottom-up from audited Net Income to the §1.01 defined figure. Every basket cap and ratio test downstream depends on this number.

FY2025

Waterfall — Sherwood Financing plc Offering Memorandum dated November 2021, pp.454-455 — §1.01 'Consolidated EBITDA'. Clause (4) verbatim: 'consolidated amortization, including any amortization of Portfolio Assets, and impairment expense'. THIS IS THE DISPOSITIVE CLAUSE. Portfolio amortization IS explicitly an add-back. The 2021-vintage notes were refinanced Dec 2024 into the 2029-maturity stack — §1.01 definitions retained per standard refinancing practice (Dec-2024 OM not directly inspected; Euronext Dublin listing particulars would confirm).

§1.01 Clause	Component	Sign	Amount ($K)	Running
start	Loss for the financial year (FY2025, GBP) AR p.34 Consolidated Statement of Profit or LossGBP. PAT −£120,072k; PBT −£115,980k implies a £4,092k tax CREDIT.	=	-120,072	-120,072
§1.01 (2) taxes	Consolidated Income Taxes (tax credit, approx) AR p.34	+	4,092	-115,980
§1.01 (1) interest	Consolidated Interest Expense (finance costs net of finance income) AR p.34	+	131,133	15,153
§1.01 (3) D&A (property etc.)	Consolidated depreciation expense AR p.107 Adjusted EBITDA reconciliation	+	29,368	44,521
§1.01 (4) — PORTFOLIO AMORT EXPLICIT ADD-BACK	Amortization of Portfolio Assets (§1.01(4) EXPLICIT add-back — 'any amortization of Portfolio Assets') AR p.107	+	150,149	194,670
§1.01 (8)/(9)	FX losses (non-cash, hedging/treasury effects) AR p.107	+	31,814	226,484
§1.01 (9) hedging	Derivative fair-value movements AR p.107	+	14,018	240,502
§1.01 (5)/(8) refi/exceptional	Adjusting items (restructuring / acquisition / refinancing) AR p.107Dec 2024 refinancing + platform integration costs; permitted under (5) 'expenses related to Incurrence of any Indebtedness permitted' and (8) 'extraordinary / exceptional / unusual / nonrecurring items'	+	4,114	244,616
TOTAL	Covenant EBITDA (bottom-up §1.01 reconstruction, GBP)	=		244,616

Reconciliation

Sherwood Financing plc Offering Memorandum dated November 2021, pp.454-455 — §1.01 'Consolidated EBITDA'. Clause (4) verbatim: 'consolidated amortization, including any amortization of Portfolio Assets, and impairment expense'. THIS IS THE DISPOSITIVE CLAUSE. Portfolio amortization IS explicitly an add-back. The 2021-vintage notes were refinanced Dec 2024 into the 2029-maturity stack — §1.01 definitions retained per standard refinancing practice (Dec-2024 OM not directly inspected; Euronext Dublin listing particulars would confirm). (this page) $244.62M

Management-reported EBITDA
per investor presentation $244.60M

Δ +$0.01M

MINOR DELTA CASE APPLIES. Bottom-up footing to £244,616k vs reported £244,604k (within rounding). §1.01(4) EXPLICITLY adds back portfolio amortization — 'any amortization of Portfolio Assets' is the exact language debt-purchaser covenant drafters use. FCCR of 1.854x is ACCURATE; the catastrophic £94M / 0.71x case considered earlier does NOT apply. FCCR IMPACT: bottom-up £244.6M ÷ interest expense yields 1.854x (unchanged from scenario). Catastrophic-case assumption (portfolio amortization NOT an add-back → denominator £94M) is refuted by §1.01(4) verbatim. KNOWN-LIMITATIONS.md #02 ship-blocker resolved favorably. RESIDUAL RISKS: (i) Tax sign — £4M is a CREDIT, §1.01(2) adds back taxes 'based on income' whether paid or not; credit nets down, not up. (ii) RCF maintenance covenant (likely 7.00:1.00 secured leverage per 2021 OM, possibly renegotiated Dec 2024) operates on secured-net-debt/Adjusted EBITDA; AR discloses 6.22x vs likely 7.00x — this is the binding constraint, NOT the indenture incurrence. (iii) Dec-2024 refinance indenture text not directly inspected (not in local corpus); standard practice preserves §1.01 across refinancings. If Dec-2024 indenture materially tightened clause (4) to exclude portfolio amortization, the catastrophic case would re-open. Verify via Euronext Dublin listing particulars before external PM distribution.

Filing source

Sherwood Parentco Limited Consolidated Annual Report FY2025 (Companies House #13299333, filed 7 Apr 2026)

§ 4.09

Debt Incurrence Limitation on Indebtedness

Breach 4 computable baskets

Definitional caveat Indebtedness per the indenture is broader than company-reported debt (includes Disqualified Stock, Attributable Indebtedness, guarantees, hedging, securitization). Consolidated EBITDA per §1.01 may differ from reported or "adjusted" EBITDA — see the build-up above. True covenant leverage can shift modestly when reconciled to defined terms.

Effective Headroom $0.31 B

$0MRatio headroom

$307MComputable baskets

$307MTotal capacity

Ratio Tests § 4.09(a)

Test	Current	Threshold	Cushion	Capacity gauge	Status
Fixed Charge Coverage Ratio § Limitation on Indebtedness [4]§ Limitation on Indebtednessthe Parent and any Restricted Subsidiary may Incur Indebtedness if on the date of such Incurrence and after giving pro forma effect thereto (including pro forma application of the proceeds thereof), the Fixed Charge Coverage Ratio for the Parent and its Restricted Subsidiaries for the most recently ended four fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is Incurred would have been at least 2.0 to 1.0.	1.85×	>= 2.00×	-8%		Breach

Permitted Baskets — Computable § 4.09(b) · 4 dollar-quantified

Clause	Basket	Resolved Cap	Formula	Capacity	Section
(1)	Credit Facility Indebtedness	$104M	the greater of (x) £285 million and (y) 100% of Consolidated EBITDA	$104M cap	Limitation on Indebtedness (1) [5]§ Limitation on Indebtedness (1)(1) Indebtedness Incurred by the Parent and any Restricted Subsidiary pursuant to any Credit Facility (including in respect of letters of credit or bankers’ acceptances issued or created thereunder), and any Refinancing Indebtedness in respect thereof and Guarantees in respect of such Indebtedness in a maximum aggregate principal amount of Indebtedness then outstanding not exceeding: (i) the greater of (x) £285 million and (y) 100% of Consolidated EBITDA, plus (ii) in the case of any refinancing of any Indebtedness permitted under this clause (1) or any portion thereof, the aggregate amount of fees, underwriting discounts, premiums and other costs and expenses Incurred in connection with such refinancing;
(7)	Capital Leases and Purchase Money Obligations	$78M	the greater of (i) £20 million and (ii) 4% of Total Assets	$78M cap	Limitation on Indebtedness (7) [6]§ Limitation on Indebtedness (7)(7) Indebtedness consisting of (A) Capitalized Lease Obligations, mortgage financings, Purchase Money Obligations or other financings, Incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in a Similar Business, or (B) Indebtedness otherwise Incurred to finance the purchase, lease, rental or cost of design, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets, and (C) any Refinancing Indebtedness and Guarantees in respect of sub-clauses (A) or (B), in an aggregate outstanding principal amount which, when taken together with the principal amount of all other Indebtedness Incurred pursuant to this clause (7) then outstanding, will not exceed the greater of (i) £20 million and (ii) 4% of Total Assets;
(11)	General Basket	$80M	the greater of (i) £80 million and (ii) 27.5% of Consolidated EBITDA	$80M cap	Limitation on Indebtedness (11) [7]§ Limitation on Indebtedness (11)(11) Indebtedness in an aggregate outstanding principal amount which, when taken together with any Refinancing Indebtedness and Guarantees in respect thereof and the aggregate principal amount of all other Indebtedness Incurred pursuant to this clause (11) then outstanding, will not exceed the greater of (i) £80 million and (ii) 27.5% of Consolidated EBITDA;
(13)	Overdraft and Working Capital Facilities	$45M	the greater of (i) £45 million and (ii) 15% of Consolidated EBITDA	$45M cap	Limitation on Indebtedness (13) [9]§ Limitation on Indebtedness (13)(13) Indebtedness under any overdraft, working capital, current account, letter of credit, local credit line, bilateral financing line, foreign exchange, SWIFT and/or other similar or equivalent facilities or financial accommodation, or any other facility or financial accommodation by the Parent or any Restricted Subsidiary, provided that the maximum aggregate principal amount of Indebtedness outstanding under this clause (13) does not exceed the greater of (i) £45 million and (ii) 15% of Consolidated EBITDA and any Refinancing Indebtedness in respect thereof.
Σ Computable basket capacity		$307M	sum of 4 dollar-quantified clauses

Plus 6 qualitative baskets (unlimited / existing / refinancing / ratio-test) — not dollar-quantified here.

RCF

RCF Maintenance Covenants Revolving Credit Facility Agreement — separate from indenture

Warning 1 covenant

RCF maintenance covenants are tested continuously (or quarterly) under the Revolving Credit Facility Agreement — not the bond indenture. Typical HY capital structures cross-default RCF breach into the senior secured notes, then into the senior unsecured notes. RCF covenants often use a different EBITDA definition (RCF-Agreement Adjusted EBITDA) from the indenture §1.01 Consolidated EBITDA — watch the definitional basis line below.

Covenant	Current	Threshold	Cushion	Status	Testing	Cross-default
Consolidated Leverage Ratio as of 2025-12-31	6.22×	<= 7.00×	11%	Warning	quarterly; springing — tested only if drawn > 40% of RCF commitments on the last day of the 12-month period · springing	→ senior notes
Definition: Consolidated Leverage Ratio as defined in the Revolving Facility Agreement, tested on each quarter date over each 12-month period. Denominator is group Consolidated EBITDA per RCF-agreement definition (Arrow-style debt-purchaser EBITDA with portfolio amortisation as an add-back). EBITDA basis: RCF-Agreement Consolidated EBITDA. Arrow's reported Adjusted EBITDA of £244.6M includes £150M portfolio-amortisation add-back which the RCF agreement accepts (consistent with AR p.87 'single financial covenant — a leverage covenant' disclosure and AR p.113 disclosed 6.22x). Bottom-up indenture §1.01 reconciliation (scenario.ebitda_buildup) also produces £244.6M within rounding — so the two definitions appear aligned for FY2025. Source: “2021 OM pp.303-304: 'The Revolving Facility Agreement requires that the consolidated leverage ratio in respect of each period of twelve months ending on any quarter date (the "Consolidated Leverage Ratio") shall not be greater than 7.00:1.00 provided that this financial covenant is only to be tested if on the last day of such period, the amount of loans drawn under the Revolving Facility is greater than 40% of the total Revolving Facility commitments.' AR p.87: 'single financial covenant — a leverage covenant'; AR p.113: 6.22x secured-net-debt/Adjusted EBITDA at 31-Dec-2025.” — 2021 Offering Memorandum pp. 303-304 (section 'Financial Covenant' under 'Revolving Facility Agreement'); Dec-2024 refi terms not directly inspected — Euronext Dublin listing particulars not in local corpus Note: Equity-cure permitted (max 4 cures pre-maturity, no consecutive quarters). Covenants SUSPENDED if rated ≥ Baa3/BBB- (not currently). Dec-2024 refinance retained same £285M RCF size; standard market practice preserves covenant level across refis but NOT directly confirmed — threshold could have been reset to 6.00x or 6.50x in the Dec-24 paper. RCF IS CURRENTLY TESTED (drawn 63.5% > 40% trigger). Cushion 11.1% — TIGHT. Combined with indenture FCCR 1.854x / BREACH status on the headline and management's medium-term 3.0x target vs actual 6.22x, this issuer is under real covenant pressure.

§ 4.12

Permitted Liens Limitation on Liens

In Compliance 1 computable

Permitted Baskets — Computable

Clause	Basket	Resolved Cap	Formula	Capacity	Section
(25)	General Liens Basket	$24M	the greater of £18 million and 10% of Consolidated EBITDA	$24M cap	Definition of Permitted Liens (25) [10]Definition of Permitted Liens (25)(25) Liens; provided that the aggregate principal amount of Indebtedness (excluding capitalized interest) secured by such Liens in aggregate does not at any one time exceed the greater of £18 million and 10% of Consolidated EBITDA at any one time outstanding;

Plus 7 qualitative lien carve-outs (unlimited / existing / refinancing) — standard HY patterns.

§ 4.07

Restricted Payments Limitation on Restricted Payments

In Compliance 1 computable

Permitted Baskets — Computable

Clause	Basket	Resolved Cap	Formula	Capacity	Section
(10)	Post-IPO Dividends	$0M	the greater of (a) 6% of the Net Cash Proceeds received by the Parent from such Public Offering or (b) following the Initial Public Offering, 7% of the Market Capitalization	$0M	4.07(b)(10) [11]§ 4.07(b)(10)(10) so long as no Default or Event of Default has occurred and is continuing (or would result therefrom), the declaration and payment by the Parent of, or loans, advances, dividends or distributions to any Holding Entity to pay, dividends on the common stock or common equity interests of the Parent or any Holding Entity following a Public Offering of such common stock or common equity interests, in an amount not to exceed in any fiscal year the greater of (a) 6% of the Net Cash Proceeds received by the Parent from such Public Offering or contributed to the equity (other than through the issuance of Disqualified Stock or Designated Preference Shares or through Excluded Amounts, the Equity Contribution or an Excluded Contribution) of the Parent or loaned or contributed as Subordinated Shareholder Funding to the Parent, and (b) following the Initial Public Offering, 7% of the Market Capitalization;

Builder Basket § 4.07(a)(C) · cumulative capacity since Issue Date

Total gross capacity $0M

§ IV

Sources & Verbatim Citations Every computed figure traces to a specific clause and page in the source indenture.

13 citations · 1 source PDF

SOURCE arrow_global_2027_offering_memorandum.pdf EXTRACTED 2026-04-23 09:51 UTC

4.07(a)(c)(i) · p. 451
(i) 50% of Consolidated Net Income for the period (treated as one accounting period) from the first day of the first fiscal quarter commencing after the Acquisition Completion Date to the end of the most recent fiscal quarter ending prior to the date of such Restricted Payment for which internal consolidated financial statements of the Parent are available (or, in the case such Consolidated Net Income is a deficit, minus 100% of such deficit, provided that the amount taken into account pursuant to this clause (i) shall not be less than zero);
4.07(a)(c)(ii) · p. 452
(ii) 100% of the aggregate Net Cash Proceeds, and the fair market value of property or assets or marketable securities, received by the Parent from the issue or sale of its Capital Stock (other than Disqualified Stock or Designated Preference Shares) or Subordinated Shareholder Funding subsequent to the Issue Date or otherwise contributed to the equity (other than through the issuance of Disqualified Stock or Designated Preference Shares) of the Parent subsequent to the Issue Date...
4.07(a)(c) · p. 451
(c) the aggregate amount of such Restricted Payment and all other Restricted Payments made subsequent to the Issue Date (and not returned or rescinded) (including Permitted Payments permitted below by clauses (5)(a) (without duplication of amounts paid pursuant to any other clause of the second succeeding paragraph), (6), (10), (11) and (12) of the second succeeding paragraph, but excluding all other Restricted Payments permitted by the second succeeding paragraph) would exceed the sum of (without duplication): (i) 50% of Consolidated Net Income for the period...
Limitation on Indebtedness · p. 444
the Parent and any Restricted Subsidiary may Incur Indebtedness if on the date of such Incurrence and after giving pro forma effect thereto (including pro forma application of the proceeds thereof), the Fixed Charge Coverage Ratio for the Parent and its Restricted Subsidiaries for the most recently ended four fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is Incurred would have been at least 2.0 to 1.0.
Limitation on Indebtedness · p. 445
(1) Indebtedness Incurred by the Parent and any Restricted Subsidiary pursuant to any Credit Facility (including in respect of letters of credit or bankers’ acceptances issued or created thereunder), and any Refinancing Indebtedness in respect thereof and Guarantees in respect of such Indebtedness in a maximum aggregate principal amount of Indebtedness then outstanding not exceeding: (i) the greater of (x) £285 million and (y) 100% of Consolidated EBITDA, plus (ii) in the case of any refinancing of any Indebtedness permitted under this clause (1) or any portion thereof, the aggregate amount of fees, underwriting discounts, premiums and other costs and expenses Incurred in connection with such refinancing;
Limitation on Indebtedness · p. 446
(7) Indebtedness consisting of (A) Capitalized Lease Obligations, mortgage financings, Purchase Money Obligations or other financings, Incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in a Similar Business, or (B) Indebtedness otherwise Incurred to finance the purchase, lease, rental or cost of design, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets, and (C) any Refinancing Indebtedness and Guarantees in respect of sub-clauses (A) or (B), in an aggregate outstanding principal amount which, when taken together with the principal amount of all other Indebtedness Incurred pursuant to this clause (7) then outstanding, will not exceed the greater of (i) £20 million and (ii) 4% of Total Assets;
Limitation on Indebtedness · p. 447
(11) Indebtedness in an aggregate outstanding principal amount which, when taken together with any Refinancing Indebtedness and Guarantees in respect thereof and the aggregate principal amount of all other Indebtedness Incurred pursuant to this clause (11) then outstanding, will not exceed the greater of (i) £80 million and (ii) 27.5% of Consolidated EBITDA;
Limitation on Indebtedness · p. 447
(12) Indebtedness (including any Refinancing Indebtedness and Guarantees in respect thereof) in an aggregate outstanding principal amount which, when taken together with the principal amount of all other Indebtedness Incurred pursuant to this clause (12) and then outstanding, will not exceed 100% of the Net Cash Proceeds received by the Parent from the issuance or sale (other than to a Restricted Subsidiary) of its Subordinated Shareholder Funding or its Capital Stock (other than through the Equity Contribution, Disqualified Stock, Designated Preference Shares or an Excluded Contribution) or otherwise contributed to the equity (other than through the Equity Contribution, issuance of Disqualified Stock, Designated Preference Shares or an Excluded Contribution) of the Parent, in each case, subsequent to the Issue Date;
Limitation on Indebtedness · p. 448
(13) Indebtedness under any overdraft, working capital, current account, letter of credit, local credit line, bilateral financing line, foreign exchange, SWIFT and/or other similar or equivalent facilities or financial accommodation, or any other facility or financial accommodation by the Parent or any Restricted Subsidiary, provided that the maximum aggregate principal amount of Indebtedness outstanding under this clause (13) does not exceed the greater of (i) £45 million and (ii) 15% of Consolidated EBITDA and any Refinancing Indebtedness in respect thereof.
Definition of Permitted Liens (25) · p. 532
(25) Liens; provided that the aggregate principal amount of Indebtedness (excluding capitalized interest) secured by such Liens in aggregate does not at any one time exceed the greater of £18 million and 10% of Consolidated EBITDA at any one time outstanding;
4.07(b)(10) · p. 456
(10) so long as no Default or Event of Default has occurred and is continuing (or would result therefrom), the declaration and payment by the Parent of, or loans, advances, dividends or distributions to any Holding Entity to pay, dividends on the common stock or common equity interests of the Parent or any Holding Entity following a Public Offering of such common stock or common equity interests, in an amount not to exceed in any fiscal year the greater of (a) 6% of the Net Cash Proceeds received by the Parent from such Public Offering or contributed to the equity (other than through the issuance of Disqualified Stock or Designated Preference Shares or through Excluded Amounts, the Equity Contribution or an Excluded Contribution) of the Parent or loaned or contributed as Subordinated Shareholder Funding to the Parent, and (b) following the Initial Public Offering, 7% of the Market Capitalization;
4.07(b)(11) · p. 456
(11) so long as no Default or Event of Default has occurred and is continuing (or would result from) (a) Restricted Payments (including loans or advances) in an aggregate amount outstanding at any time not to exceed the greater of £35 million or 12.5% of Consolidated EBITDA, and (b) any Restricted Payment, provided that the Consolidated Leverage Ratio on a pro forma basis after giving effect to any such Restricted Payment does not exceed 3.0 to 1.0 (or in the case of a Restricted Payment consisting of an Investment or the repayment, redemption or repurchase of Subordinated Indebtedness, Consolidated Leverage Ratio on a pro forma basis after giving effect to any such Restricted Payment does not exceed 3.25 to 1.0);
4.07(b)(13) · p. 456
(13) Restricted Payments in an aggregate amount outstanding at any time not to exceed the fair market value of Excluded Contributions, or consisting of non-cash Excluded Contributions, or Investments to the extent made in exchange for or using as consideration Investments previously made under this clause (13);