E. Some years later, BeerCo has become a really successful beer supplier, making a significant amount of profits after the acquisition of some of the most profitable breweries in Spain and Germany. For the acquisition of those breweries, BeerCo obtained financing lent by Beerbank for 50 million, with maturity in 7 years and an interest rate of 10 per cent.

A private equity firm is interested in acquiring 100% of the share capital in BeerCo. The shareholders will be interested in transferring it for a price of, at least, 100 million. The private equity house will incorporate a NewCo in Spain that will be the entity purchasing the shares in BeerCo. Assume that the Banks are willing to grant funds (under a Senior Loan) of up to 80 million, with a maturity of 5 years and an interest rate of 5%. In addition, the Fund has identified a Mezzanine Lender that is willing to provide anotehr 30 million, with maturity in 7 years, and an interest rate of 8%. The private equity house has to decide the funding structure and, in this sense, they have to determine the following: 1. the amount of debt to be borrowed from the banks and the Mezz Lender; 2. the entities to act as borrowers for the different financing facilities; 3. the destiny of each financing facility; 4. the form in which the Private Equity house could inject its own investment into NewCo; and 5. the Managing director of the Private Equity house asks you, as an analyst, why you are willing to pay 100 million for a compnay with such a balance sheet. Please answer such question using as many assumptions as you may beed supporting the price that you will pay for it. Explain your answers and assumptions briefly.

1 ASSETS 2 15,000,000 land 3 10,000,000 buildings 4 25,000,000 Stock 5 50,000,000 Shares in subsidiaries 6 10,003,000 cash/bank acct:s 7 110,003,000 TOTAL ASSETS LIABILITIES Share Capital 3,000 Share Premium 0 Retained Profits 50,000,000 Bank Loan 50,000,000 Shareholder Loan 10,000,000 TOTAL LIABILITIES 110,003,000