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Valuation & Financial Analysis
 

fedetpf's picture
(Chimp, 5
 
Points)
 on 6/8/12 at 6:30pm

Hello guys,

I am working on a case study and have to write a critical essay about a PE acquisition, and I have just few data available to perform a brief financial analysis of the acquired company.

I have:

Ebitda 2009 : 300 K
Net Sales 2009 : 600 K
RAB (Regulated Asset Base) 2009 : 3000 K
FCF 2010 : 105 K

I would like to have some sort of advice on how to proceed with these data to perform some sort of analysis. Is there any way I can have some sort of quick valuation with these data?

I also have a slide with the description of the financing package including the covenants on the debt. Here I have a section telling me about pricing and fees of the financing. I have a margin over debt of 275 bps. Does that mean that the interest rate for that loan is EURIBOR + 2,75%?
What kind of considerations are usually made when analyzing a financing package?

Thank you very much and I apologize if I posted this question in the wrong section.

Tags:
couchy's picture

It's tough to get valuation

(King Kong, 1,368
 
Points)
 on 6/8/12 at 9:29pm

It's tough to get valuation without a growth rate, as growth is a major driver of value. I suppose you could use assets as a driver for growth.

With covenants and financing info, you can dig into the credit analysis.

But based on the breif numbers, the company is kinda expensive

fedetpf's picture

FINANCING PACKAGE STRUCTURE

(Chimp, 5
 
Points)
 on 6/8/12 at 10:42pm

FINANCING PACKAGE STRUCTURE

TERM LOAN €800m CAPEX LINE €150m WC FACILITY €75m

Tenor 5years

Pricing

 275bps from year 1 to year 3
 325bps from year 3 to year 4
 425bps thereafter

Fees
 Upfront fee:1% of principal amount
 Participation fee: 1.25% of committed amount
 Commitment fee: 35% of the applicable margin per year

COVENANTS

Interest cover ratio = FFO / Net finance charges
DEFAULT >2.35 from year 1 to year 3 >2.15 thereafter
LOCK-UP > 2.65

Leverage = Net debt / EBITDA
DEFAULT <5.5
LOCK-UP <5.2

VIR leverage= Net debt / VIR
DEFAULT < 50.5%
LOCK-UP < 45.5%

LTV =Net debt / RAB
DEFAULT< 65.0%
LOCK-UP< 60.0%

fedetpf's picture

Will this help? What can I

(Chimp, 5
 
Points)
 on 6/8/12 at 10:43pm

Will this help? What can I say about this financing package?

Thank you very much

HYAddict's picture

Let me get this straight,

IB
(Monkey, 45
 
Points)
 on 6/18/12 at 9:42am

Let me get this straight, EUR300k EBITDA with a total loan package (assumed drawn day 1) of EUR1.025bn? There must be a mistake (or this is two separate case studies) because the multiple is too large for the EBITDA you have here.

Anyway, preliminary assessment is that you have a single term loan, with pricing and fees below current (2011/12) market rates. I would expect a TLA to be at EURIBOR +425bps and TLB at EURIBOR +475bps for an LBO at current market rates (given this is a Euro deal and the syndication market is fucked it probably won't go through banks credit committees unless it is watertight).

This is the type of thing you should focus on:
1) What is the industry and how does the quantum of debt, senior structure and multiples compare to the latest/last LBOs
2) What type of pre-financing cashflow will this company require on a continuous basis to fund the interest (and amortisation?) payments including step-ups? Is this realistic based on the rate of Sales/EBITDA growth vs. market expectations, cost base movements etc
3) What type of w/c cycle does this company have, what is the probability they will draw down the working cap facility and what type of covenants do you have around this to be repaid
4) How does the debt facilities rank: who gets first dibs in the event of default?

Also, if you want to be a smart bastard, discuss what jurisdiction this financing package should be under (given it is Euros I expect it to be European, so the French/Swiss systems are crappy for creditors, advocate signing this under English [not UK] law).

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