LBO Modelling Test - Doubts
Had a modelling test for an interview recently which had a Term loan and Revolver for an. I have not modelled with RCFs before, so I have a few questions.
So the RCF is a 400 MM facility, with 4% interest and 1.5% maintenance fee. My questions are.
When to draw the RCF? I would suppose when in any particular year, the (cash flow - debt service) becomes negative, that is when I payback right?
In that case when to repay the RCF? In the subsequent years when there is excess cash?
About the interest rate of 4%, it only applies on the drawn down amount right?
About the maintenance fee of 1.5%, I assumed it applies on the entire 400 MM, but on second thought, I am not sure now. Does it only apply on the undrawn part?
One more question I had with the Term Loan part: It said repayment on excess. Does it mean that any additional cash flow should be taken for the repayment? Or a part of it? How does it work in reality?
Thanks a ton for the help :)
Kind of absolutely battered after I bombed the interview today but need to buckle up and learn fast as I have a couple more lined up. I am pretty good with the paper lbo case that you are asked in the interview, but this was a first of a kind experience for me. Any tips on how to prepare for this in a time efficient way would be very much appreciated :)