Off-cycle Financial Restructuring Intern

HL first round
30mn, 1 Analyst and one ASSO/VP?
- Tell me about yourself
- Why RX
- Asked what would be the reasons for a company to find themselves in need of a Restructuring.
- Gave me time to give 3 reasons out of the 5 I wanted to give, then Iminterrupted with a smirk and asked why would a credit downgrade affect the company
- what would be potential solutions ?

- Technical questions :

- 100m in EBITDA, Coverage ratio of 2x, 10% Interest expense. What's the total debt of this company?

- 3 statement question. A company buys $200m of assets, 50% using cash, 50% using debt. The asset has a useful life of 10 years. The interest expense on the debt is 5% in cash and 5% in PIK. The tax rate is 20%. What's the impact on the 3 Statements at the end of year 1 ?

- Company with a $100m in EBITDA trading at 6x. $100m RCF, $300m of unsecured notes, $200m of term Loans. What's the recovery value of the different debt pieces?

- Now same scenario but the EBITDA decreased to $50m, the RCF is super senior, the term loan is senior secured, and the notes are senior unsecured. What's the recovery value now?

Conceptual questions:
- What can you find in credit docs?
- Anything more? I try to answer but vaguely, and he then adds some key details.
- Can you cite me examples of covenants? Affirmative, Negative...
- What is the primary additional indebtness covenant?
- So is the leverage ratio a maintenance or incurrence covenant?