Extraction

What we found in an 892-page credit agreement

Forty-seven covenants, 61 tests, 112 baskets and 418 defined terms out of one scanned facility in 27 minutes, with 1,003 of 1,014 citations verified by machine. What the AI got wrong, and how we knew.

892 pages, scanned A&R + 4 amendments + ICA + security Where the terms live pp. 187 to 341 + 62 pages of definitions Register covenants47 tests61 baskets112 carve-outs203 defined terms418 27 min1,014 citations 1,003 quote found on page kept, no human needed 11 could not be verified routed to a reviewer the check that matters: is the quoted passage on the cited page, word for word, and is the figure inside it? the 11: a superseded pricing grid, a basket sized by reference to the intercreditor, an add-back cap read the wrong way round
From 892 pages to a register in 27 minutes. Every figure carries a verbatim quote and a page; the machine checks each one, and the eleven it cannot verify are the eleven a person reads.

Last month a bank sent us a credit agreement to see what ExactCov would make of it. It was 892 pages: the amended and restated facility, four amendments, an incremental joinder, the intercreditor and a security agreement, all in one scanned PDF with the schedules at the back and the pricing grid replaced twice. The kind of document that gets read properly once, at closing, by the lawyers who drafted it.

We ran it in the afternoon. This post is about what came out, what the AI got wrong, and how we knew.

What came out

ItemCount
Pages read892
Pages holding covenant provisions187 to 341, plus 62 pages of definitions
Covenants in the register47
Ratio and threshold tests61
Baskets, with their capacity and grower components112
Carve-outs and exceptions linked to a covenant203
Defined terms with a plain-English summary418
Citations, each a verbatim quote on a named page1,014
Citations machine-verified against the page1,003
Items routed to a human reviewer11
Wall-clock time27 minutes

The 47 covenants are the ones you would expect from a large-cap leveraged facility: two maintenance tests, a long negative covenant package with indebtedness, liens, restricted payments, investments, asset sales and affiliate transactions, the reporting and notice obligations, and the events of default that hang off them. The 61 tests are the ratios and thresholds inside those covenants, including the ones that only exist to unlock a basket. The 112 baskets are where the document earns its length, because most of them are the greater of a fixed amount and a percentage of EBITDA, and the percentage points at a definition that runs to four pages.

What the AI got wrong

Eleven items did not survive our checks and went to a person. Three are worth describing, because they are the shape of mistake anyone reading a document like this makes, human or not.

  • A superseded pricing grid. The third amendment replaced the margin grid in full. The first pass extracted both grids and could not say which was live. The reviewer marked the original as superseded with a citation to the amendment, and the register now shows the grid in force and the one it replaced.
  • A basket defined by reference to another agreement. One investment basket was sized by reference to a capacity in the intercreditor. The extraction captured the cross-reference but not the number, and said so. That is the right outcome. A confident wrong number is the failure mode we design against; an honest gap is a task for a reviewer.
  • An EBITDA add-back cap. The add-back for cost savings was capped at a percentage of EBITDA "prior to giving effect to this clause". The first pass read the cap as applying after. A second pass over the same passage corrected it, and both readings are in the audit trail with the quote that decided between them.

Everything else passed the check that matters: the quote the model gave for each figure is on the page it cited, word for word, and the number in the register appears inside that quote. A citation that fails that test never reaches the register without a person looking at it.

How we know, without saying how we do it

People ask how the models are arranged, which ones we use and what they are told. We do not publish that, and not out of coyness. It changes every quarter, it is the part of the work that took the longest to get right, and it is not the reason to trust the output. The reason to trust the output is that you can check it, one page at a time, and that we check it first.

The AI reads the document. The register is only allowed to keep what the document can be shown to say.

So the promise is not "the model is very good", although it is. The promise is that every figure in front of a credit officer carries its page and its quote, that the verification is done by machine before a human ever sees the number, and that the eleven items in 892 pages the machine could not verify were the eleven items a human read. That is a review the second line can put its name to, and it is a different thing from a summary.

The agreement is now in the register with its reporting calendar set up from the covenant compliance certificate schedule. The first certificate is due in October. The tests will run the day it arrives, against those 61 thresholds, with the 892 pages behind them.

See it against your own book

Bring a handful of agreements and the NAV notices you already receive. We show what the register looks like, what is stale, and what would have fired.