What are the potential impacts on Flywire's credit facilities and covenants if a settlement is required?

Fundamental outlook

If the class‑action settlement materialises, Flywire will have to allocate a lump‑sum cash outlay (potentially tens of millions of dollars given the size of the alleged losses). That drains liquidity precisely at a time when the company is still servicing a sizable revolving credit facility (≈ $250 mm) that carries standard “cash‑flow” and “leverage” covenants. A one‑off cash hit can push the leverage ratio above the 3.0 × EBITDA ceiling and may trigger a covenant breach on the “minimum cash‑balance” clause, forcing the lender to either waive the covenant (often at a premium) or demand immediate repayment. In the short term, management is likely to tap the revolving line to meet the settlement, which will reduce the available borrowing capacity for working‑capital and growth projects and could tighten the bank’s credit‑risk rating on Flywire.

Market and technical implications

The prospect of a settlement has already been priced into the equity, as reflected in the –60 sentiment and a 5‑6 % decline in the past week, with the stock hovering near its 200‑day moving average (≈ $12.30). A confirmed covenant breach would amplify downside pressure, potentially breaking the 20‑day moving average and inviting short‑covering rallies if the price slides below $11.00. Conversely, if Flywire secures a covenant waiver or restructures the settlement through a staggered payment plan, the stock could rebound toward the $13.00 resistance level, offering a short‑covering bounce.

Actionable trade idea

• If you are risk‑averse: stay short or reduce exposure until the settlement amount and any covenant waivers are disclosed in the next SEC filing (Form 8‑K). A break below $11.00 with volume on the break could trigger a deeper sell‑off.
  
• If you are bullish on the long‑run: consider a buy‑the‑dip at $11.00–$11.50, betting that management will negotiate a covenant waiver and that the settlement will be funded via a modest draw on the revolving facility, leaving enough headroom for future growth financing.
  

In either case, monitor the upcoming 10‑Q and any lender correspondence for covenant‑compliance updates, as those will be the primary drivers of Flywire’s credit‑facility risk and, consequently, its equity price.