DAVEY TREE EXPERT CO
Davey Tree simultaneously amended three financing agreements — its revolving credit facility (KeyBank-led), private placement notes (PGIM/Prudential), and receivables securitization (PNC) — on October 29, 2026. The core change: the maximum leverage ratio covenant was relaxed to 4.25x through June 30, 2027, stepping down to 4.00x for H2 2027 and 3.75x thereafter. The amendments also introduced higher pricing tiers tied to leverage levels and new restrictions on acquisitions and insider equity repurchases.
- Maximum leverage ratio covenant relaxed to 4.25x through June 30, 2027, stepping down to 4.00x (H2 2027) and 3.75x thereafter.
- Private placement notes incur an additional 0.25% fee if leverage exceeds 3.00x, rising to 0.50% above 3.50x.
- SOFR margin on revolving credit widened to a range of 0.875%–2.00%, up from a prior cap of 1.75%.
- Acquisitions now require pro forma leverage below 3.25x; if between 3.00x–3.25x, aggregate consideration capped at $10M over trailing 12 months.
- Voluntary equity repurchases from departing insiders capped at $4M/year if pro forma leverage exceeds 2.75x.
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A coordinated three-agreement covenant amendment is a strong signal that Davey Tree's debt load has outgrown its prior constraints, and the pricing escalators create a direct P&L cost if leverage doesn't improve.
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The covenant relaxation signals that Davey Tree's leverage has risen to levels that required renegotiation across all three credit facilities. The step-up pricing on private placement notes and wider SOFR margins increase borrowing costs as leverage climbs, while the acquisition cap at $10M when leverage is between 3.00x–3.25x constrains M&A flexibility.