The covenant waiver signals near-term earnings pressure. Monitor the next 10-Q for fixed charge coverage details. If the company breaches the temporarily lowered covenant or fails to restore the ratio by December 2026, credit downgrade risk increases materially.
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Executive Summary
World Acceptance Corporation entered into a consent agreement with its lenders to temporarily relax its fixed charge coverage ratio covenant for three fiscal quarters ending in 2026. The covenant floor drops from 2.25x to 2.20x (Mar 31, 2026), 2.10x (Jun 30, 2026), and 2.15x (Sep 30, 2026), reverting to 2.25x thereafter. This signals that the company's earnings have weakened enough to necessitate a covenant waiver, which is a credit-negative event for a subprime lender.
Key Financial Metrics
Key Facts
- Fixed charge coverage ratio covenant lowered from 2.25x to 2.10x for June 2026 quarter
- Temporary waiver covers quarters ending March, June, and September 2026
- Consent fee of 0.03% of aggregate commitments paid to lenders
- No event of default currently exists, per company representation
- Covenant reverts to original 2.25x threshold starting Dec 31, 2026
Financial Impact
Covenant relaxation by 0.05x-0.15x across three quarters, suggesting earnings coverage erosion
Risk Factors
- Further earnings deterioration could lead to additional covenant breaches
- Credit rating downgrade potential if ratio does not recover
- Higher borrowing costs or reduced access to credit facility if defaults re-emerge
Market Snapshot
Investment Themes
Documents Analyzed
This report is based on 5 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| 8-K Filing (Primary) | 0000108385-26-000011 |
| Document: consentandlimitedmodificat.htm | 0000108385-26-000011 |
| Document: 0000108385-26-000011-index-headers.html | 0000108385-26-000011 |
| Document: 0000108385-26-000011-index.html | 0000108385-26-000011 |
| Document: 0000108385-26-000011.txt | 0000108385-26-000011 |
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Filters
| Type | Now | ||||
|---|---|---|---|---|---|
Oct 23, 2026 3d ago | 8-K | $171.01 | awaiting T+1 | — | $167.36 (−2.13%) |
Sep 21, 2026 5w ago | 8-K | $171.09 $172.99 | ▲ +1.11% | ▲ +1.13% | $167.36 (−2.18%) |
Aug 18, 2026 9w ago | Insider Cluster | $184.55 $183.94 | ▲ +0.33% | ▼ −0.51% | $167.36 (+9.31%) |
Aug 13, 2026 10w ago | 8-K | $194.75 $190.00 | ▼ −2.44% | ▼ −1.97% | $167.36 (−14.06%) |
Aug 13, 2026 10w ago | Insider Cluster | $187.69 $194.75 | ▲ +3.76% | ▲ +3.96% | $167.36 (−10.83%) |
Aug 11, 2026 10w ago | Insider Cluster | $187.14 $189.65 | ▲ +1.34% | ▲ +1.09% | $167.36 (−10.57%) |
Aug 4, 2026 11w ago | Insider Cluster | $193.63 $192.51 | ▼ −0.58% | ▼ −0.38% | $167.36 (−13.57%) |
Jul 24, 2026 13w ago | 8-K | $204.67 $195.83 | ▼ −4.32% | ▼ −4.34% | $167.36 (−18.23%) |
Jul 1, 2026 16w ago | Insider Cluster | $219.46 $207.98 | ▲ +5.23% | ▲ +5.10% | $167.36 (+23.74%) |
Jul 1, 2026 16w ago | Insider Cluster | $219.46 $207.98 | ▼ −5.23% | ▼ −5.10% | $167.36 (−23.74%) |
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