(150) Consider the Sources & Uses schedule shown below for a leveraged buyout deal: Sources & Uses Schedule: No excess cash is being used to fund the deal, which implies that the company may have very little cash on- hand. % Total: 0.0% 18.5% Sources: Revolver: Term Loan - A: Term Loan - B: Senior Notes: Subordinated Note: Mezzanine: Excess Cash: Equity Rollover: Assume Existing Debt: Sponsor Common Equity: Total Sources: $ in Millions x EBITDA $ 0.0 x 253.6 1.5 x 253.6 1.5 x 202.9 1.2 x 152.2 0.9 x 152.2 0.9 x 0.0 x 0.0 x 0.0 x 356.4 2.2 x $ 1,370.9 8.3 x Uses: Equity Value of Company: Refinance Existing Debt: Assume Existing Debt: Advisory, Legal & One-Time Fees: Capitalized Financing Fees: Total Uses: Sin Millions X EBITDA S 946.7 5.7 x 361.5 2.2 x 0.0x 35.0 0.2 x 27.8 0.2 x $ 1,370.9 8.3 x % Total: 69.1% 26.4% 0.0% 2.6% 2.0% 100.0% 18.5% 14.8% 11.1% 11.1% 0.0% 0.0% 0.0% 26.0% 100.0% The Revolver is not being drawn on initially, which indicates the company might have liquidity problems. Ownership Percentages: Rollover Investor Ownership %: Existing Investor Ownership %: New Investor Ownership %: Total: Pre-Deal: 0.0% 100.0% 0.0% 100.0% Post-Deal: 0.0% 0.0% 100.0% 100.0% The company's existing debt is being refinanced in the deal, which is much riskier than leaving it in place. Click to View Larger Image Based on this schedule, why might you be concerned about the viability of this deal from the perspective of an investor? Existing shareholders and management team members are not rolling over any equity, which may be a sign that they're not fully behind the company. Subordinated Notes and Mezzanine, which are both more expensive forms of debt, are being used, but it's unclear whether or not they're truly necessary