How would you find out how much debt is needed to fund this reorganization?

jaanders's picture
Rank: Monkey | 62

So I'm working with a foreign PE firm, they opened a US subsidiary to acquire land in the Permian basin to eventually build a pipeline and perform some E&P. They currently operate through 2 separate subsidiaries, Sub A and Sub B. On an organizational chart it's clear that they're sister companies. I've been made aware that later this year Sub A will become the parent company of Sub B. To do this, Sub B is going to issue some High Yield Senior Notes to repay Sub B's debt and also Sub A's, in turn consolidating and refinancing their debt. My job is to estimate how much debt needs to be raised to complete this reorg. I have separate 12/31/18 audited financial statements for both entities, neither is included in each others financial statement, and knowledge that the debt will be rated Caa.

With just this information, how do I make an educated and technical estimate of how much debt will be raised to fund the refinance and consolidation of these 2 entities?

Comments (2)

Jul 2, 2019

I'd build a sources to uses worksheet that incorporates all the legal, issuance costs, other soft costs, etc. The audited FS should have outstanding debt amounts to pay off.

Jul 8, 2019