OID in LBO Modelling
I've seen OIDs accounted for a couple of different ways in LBOs and wanted some clarity on how you guys think about it.
Let's say the term loan used to finance a buyout is $100m, 99 OID, 2% financing fee. Under Sources, I would show the $100m TL. Under Uses, would the corresponding fees be $1m OID + $2m financing fees = $3m financing expenses? And then we'd amortize both over the life of the loan?
Just trying to understand best practices for modeling. Thanks guys!