Restructuring Interview Questions from Superday

Here is my attempt at the questions, could be wrong happy to discuss with anyone or op.

1. Depends on formal definition of leverage ratio, but assuming debt/EBIT is implied then we can setup two simple equations debt/EBIT =5 and EBIT / (Debt * interest rate) = 5, solve to find interest rate is 4%.

2. Again not 100% sure what the question is implying, but EV is 400 = 8*50, over 4 years collect 32m in cash interest, to get 150% MOIC at year 4 thus need additional 12 in principal appreciation, i.e. of the outstanding 200 equity would need 12/200 approx. 5.5%

3. super vague, but income statement not affected by equity financing, debt financing take into account interest expense from new issuance, tax effect (ITS) to find NI. SCF consider if PIK debt (add back interest expense) otherwise in CFF add in CF from issuance, on Balance sheet record higher Liab / APIC which is offset by increaed cash balance thanks to issuance.

4. EV is already excluding cash (maybe ask to check). secured is above junior in capital structure assuming no structural subordination or equitable subordination. Since fulcrum security and absolute priority rule, 50m of EV to cover 100m of claims, means it should trade 50c on the dollar.

4b. Assuming MV of 50, YTM = (10 + (100-50)/5) / 150/2 = 42% ?

5. Assuming operating income is EBIT then add back depreciation (Non cash expense) and deduct capex to get UFCF = 35. Then deduct of interest expense but add back interest tax shield, net down by 9 assuming 40% tax rate. LFCF = 26.

5b Leverage ratio generally defined as through on EBITDA, i.e. DEBT / EBITDA. Thus find EBITDA is 50, DEBT is 400, so Leverage ratio of 8.0x

Would be happy to hear ifothers agree disagree