As McBride approaches its FY22 period end, it has announced a further bank covenant waiver. Its banking group had previously waived the December 2021 test, and also now waives the June 2022 test until September 2022. McBride has agreed to maintain the terms of this waiver, which includes maintaining at least £40m of liquidity. It currently stands at £75m. Net debt is expected to be higher vs our forecasts, largely due to the impact of inflation on working capital and a deterioration in creditor terms. We expect c£180m closing debt for FY22E, rising to £200m for FY23E (incl. IFRS 16). The group has also agreed not to pay dividends until it is dividend compliant. McBride also has its own capital allocation plan which indicates it will only declare a dividend if net debt is below 2x EBITDA. Reassuringly, it confirms trading is in line with expectations. It will provide more detail in a closing statement in July. However, at the half year, the group indicated it expected losses to reduce in 2H. The 1H EBITA loss was £14.8m and we are forecasting a FY22E EBITA loss of £24m. In February, it also remarked that, as its pricing actions were expected to reach maturity in Q4, it was anticipating the business to return close to breakeven at the EBITA level. If this is the case, we could expect the group to move back to modest levels of profit in FY23. We forecast EBITA of £3m (down from £6m). Returning to profit in FY23 will help improve EBITDA (FY23E £25m), but the debt levels mean it will not meet its banking covenants without further actions. Hence, it will continue to explore and assess all avenues to maintain liquidity and create additional funding, with a view to finding a solution by the time of its FY results (September). Setting a target price in the circumstances is difficult. We have assumed the balance sheet issues are resolved in settling our TP at 40p, but leave our recommendation at Hold until we know the outcome.