Case Study Debt Financing

Hey guys! I have been given a case study to prepare for an Investment Banking AC. They want me to recommend on the best financing solution of a company into a new market.

I have been given the company’s financial profile (Revenue, CapEx and Net Leverage) and their activities across various countries (Global Revenue, Market Penetration and Growth Prospects).

I have also been given an overview of their financing options and selected financial data for their peers. I have not even been given a cash balance of the company so I am really struck. Any suggestions on how to approach this? Thank you very much for your help.

 
Best Response

The us term loan b usually requires a rating, is less restrictive than bank loan, and cheaper than a bond.

Bonds are less restrictive but almost always require ratings and have virtually unlimited capacity in terms of deal size. More expensive than loans and usually not secured as loans would be.

Mezz/pref/convertible is your cash flows don’t fit into the above buckets are more expensive but allow more freedom.

Common equity is usually the most expensiv3 but won’t increase leverage and does not affect or in some cases helps credit ratios.

 

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