Tools / Contract library / The leverage covenant and run-rate EBITDA from signed contracts
Contract library · Neocloud corporate revolvers
The leverage covenant and run-rate EBITDA from signed contracts
How does a neocloud’s revolver treat contracted GPU revenue that has not started yet?
It counts it, with limits. Nscale’s net leverage must not exceed 6.00 times, tested each quarter from June 2026. After a material acquisition it may rise to 7.00 times for four quarters, up to three times, with two compliant quarters between. EBITDA may include, at Nscale’s option, a good faith estimate of the EBITDA from take-or-pay or similar contracts not yet at full utilisation, measured at run-rate up to 24 months ahead, net of what the contract has already earned. The debt needed to serve those contracts counts as debt in the ratio, and no credit is given after a contract ends. For in-house teams: a signed GPU contract supports borrowing before the servers are live, which matters for a business growing as fast as a neocloud.
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What the filed contracts say
Contract
What the filed wording says
Nscale corporate revolver
Net leverage must not exceed 6.00 times, tested quarterly from June 2026.
Nscale corporate revolver
After a material acquisition it may reach 7.00 times for four quarters, at most three times.
Nscale corporate revolver
EBITDA may include a good faith run-rate estimate from take-or-pay contracts not yet at full use, up to 24 months ahead.
Nscale corporate revolver
Earnings already booked from the contract are netted off.
Nscale corporate revolver
No credit is given after the contract ends.
Nscale corporate revolver
Debt needed to serve those contracts counts in the ratio.
The filed wording
As of the last day of each Fiscal Quarter, commencing with the Fiscal Quarter ending June 30, 2026, the Total Net Leverage Ratio of the Borrower and its Restricted Subsidiaries for the four Fiscal Quarter period then ended shall not exceed 6.00 to 1.00 (the “Financial Performance Covenant”). Notwithstanding the foregoing, upon the consummation of a Material Acquisition during the term of this Agreement, upon written notice by the Borrower to the Administrative Agent at the consummation of such Material Acquisition of its intent to start an Increase Period, the Total Net Leverage Ratio may be greater than 6.00 to 1.00 for the first four Fiscal Quarters ending after the date of the consummation of such Material Acquisition (the “Increase Period”), but in no event shall the Total Net Leverage Ratio be greater than 7.00 to 1.00 as of the last day of any Fiscal Quarter (the “Permitted Leverage Increase”). After the Increase Period, the Total Net Leverage Ratio may not be greater than 6.00 to 1.00 as of the last day of each Fiscal Quarter until another permitted Increase Period occurs. There may be more than one Permitted Leverage Increase during the term of this Agreement, but only so long as there are two full Fiscal Quarters of compliance with the Total Net Leverage Ratio without giving effect to an Increase Period prior to the commencement of another Increase Period and no more than three Permitted Leverage Increases during the term of this Agreement.
Nscale revolving credit and guaranty agreement, with its GPU SPV carve-outs, section 7.01 · Nscale S-1, Exhibit 10.18
Each extract is quoted from the contract as filed with the SEC, checked against the filed text when it was added; “…” marks words left out. Filers redact commercial terms, so a [***] or [*] is the filer's, not ours. The summaries describe the wording, not how a court would read it, and each contract's defined terms and other clauses can change the effect. General information drawn from public filings. It is not legal advice on any transaction, and using this page does not create a lawyer-client relationship. Views are personal.
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Deals, terms and the clauses behind them, for the people financing data centres, GPU clouds and the power behind them. By Randeep Bubbra.
