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Calculate the total pro forma liabilities (classify noncontrolling interests as liabilities). You may assume assume only 75% of the maximum debt commitment is used by
Calculate the total pro forma liabilities (classify noncontrolling interests as liabilities).
You may assume assume only 75% of the maximum debt commitment is used by the new Buyers of the Company.
The maximum debt commitment is $12.75 billion. Note that Noncontrolling Interests are bought out during the transaction.
Relevant Deal Data | ||
All data provided in question 1, plus: | ||
Notes | ||
Diluted share count | 1,690,000,000 | |
Offer price per share | $13.20 | |
Equity purchase price | $22,308,000,000.00 | |
LTM EBITDA at LBO date | 3,500,000,000 | |
Balance sheet cash | 7,700,000,000 | Assume all balance sheet cash will be avaialbe to help fund the purchase. |
Oldco Debt | 1,400,000,000 | All of the company's $1.4 billion in debtwould need to be refinanced in the deal. |
Noncontrolling interest | 25,000,000 | Bell plans to buy all noncontrolling interests at their$25 millionbook value as part of the acquisition. |
Transaction fees | 3.0% | The new company would incur transaction fees amounting to3%of the total equity purchase price |
Equity rollover - % of diluted share count | 13.4% | To fund the LBO, John Bell will rollover his entire equity stake in Dwyer Labs, which amounts to 13.4% of the diluted share count. |
Equity - John Bell | 1,400,000,000 | To fund the LBO, John Bell also will contribute $1.4 billion in cash. |
Equity - Green river | 800,000,000 | The other equity owner in the new private company will be Green River, a private equity firm. Green River has committed to $800m in equity capital. |
Maximum debt commitments from lenders | 12,750,000,000 | After meeting with lenders, John Bell and Green River have received $12.75 billion in debt commitments from lenders. If there is a funding deficit, Green River has agreed to fill the gap over and above the $800 million in equity they have already agreed to. If there is a funding surplus, the newco will take less than the $12.75 billion available from lenders. |
Financing fees | 100,000,000 | Fees on new borrowing. (For purposes of this exam, assume financing fees are capitalized as an intangible asset per pre-2015 accounting rules). |
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