Why would an M&A deal be financed partly through a revolver?
I was reading about the Twitter deal, and WSJ says the financing is as follows:
The debt package includes $6.5 billion in term loans, a $500 million revolving line of credit, $3 billion in secured bonds and $3 billion in unsecured bonds, according to public disclosures. To pay for the deal, Mr. Musk also needs to come up with roughly $34 billion in equity. To help with that, he received commitment letters in May for over $7 billion in financing from 19 investors including Oracle Corp. co-founder and Tesla Inc. then-board member Larry Ellison and venture firm Sequoia Capital Fund LP.
I'm a bit confused on what a revolver's purpose is for in this case. Is it to help with PMI costs and other operating costs post merger? Not actually there for the purpose of the acquisition itself?
Because a revolver is the cheapest form of debt, however there is limitations to the size of what a revolver can be. Given it’s assets or AR
Got it. Thanks.
You don't usually fund the purchase price with RCF. This is to be drawn post Tx (if you cannot meet minium cash)
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