Company: LGN
Filing Date: 2025-05-14
Form Type: DRS/A
Source: 0000950123-25-005247
Chunk: 67

Company: Legence Corp.
Filing Date: 2025-05-14
Form: DRS/A
Chunk 67
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, a secured net
leverage ratio no greater than 6.25x and (iii) for unsecured debt or debt that is not secured by any collateral that secures the obligations under the Credit Agreement, either (x) a total net leverage ratio no greater than 6.75x or (y) an interest
coverage ratio no less than 2.00x. Solely in the case of incremental term loans or revolving loans incurred to finance a permitted acquisition or permitted investment, Legence Holdings and its subsidiaries may incur unlimited indebtedness so long
as, after giving effect to such acquisition or investment, the first lien net leverage ratio, secured net leverage ratio or total net leverage ratio, as applicable, is no greater than the level immediately prior to such incurrence or the interest
coverage ratio is not less than the level immediately prior to such incurrence, as applicable. The incurrence of such additional indebtedness is subject to other customary conditions including, but not limited to, the absence of an event of default
and certain maturity limitations.

With respect to the incurrence tests described above, as of December 31, 2024, we estimate that Legence
Holdings and its subsidiaries would have been able to incur (i) approximately $46.0 million of debt secured on a junior-priority basis to the obligations under the Credit Agreement and (ii) approximately $170.6 million of unsecured debt or debt that
is not secured by any collateral that secures the obligations under the Credit Agreement. Legence Holdings and its subsidiaries could also have incurred unlimited indebtedness in connection with a permitted acquisition or investment to the extent
such transaction was leverage-neutral.

In addition, the debt covenant under the Credit Agreement provides for additional exceptions that
could permit an unlimited amount of debt under certain circumstances, including in connection with non-speculative hedging agreements, certain acquisitions, indemnification obligations, purchase price adjustments, insurance premiums and certain
other debt incurred in the ordinary course of business or consistent with Legence Holdings’ past practice. If new indebtedness is added to Legence Holdings and its subsidiaries’ current debt levels, the related risks that we and they now
face could intensify. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Debt.”

Risks Related to Regulations

Our business and our clients’ businesses are subject to a variety of federal, state and local laws and regulations, which could adversely affect our business, financial condition and results of operations.