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Homework 3 : Capital Structu re Trades Bigtan Corp has three debt instruments outstanding with the following features: Rate Size Maturity Price Call Price Call
Homework : Capital Structu
re Trades
Bigtan Corp has three debt instruments outstanding with the following features:
Rate Size Maturity Price Call Price Call DateSr. Secured Loans SOFR anytimeSr. Unsecured Bonds Subordinated Bond Teresh Capital Partners took Bigtan private two years ago at x trailing EBITDA of $
million investing $ billion of equity in the deal to former shareholders and $ billion of new
debt all issued at par. Since then, performance has deteriorated and trailing EBITDA is down to
$ million.
Answer all the following each question is independent
What is the yield to maturity and current yield of each instrument? assume a flat SOFR
at
What were the leverage multiples at acquisition and what are they now face and
market
You want to buy subordinated bonds believing they will tighten by bps one year from
trade date exactly. What is your expected exit price and yield on the trade?
Teresh announces a sale of Bigtan to an investment grade company who will assume all
the liabilities of Bigtan. The buyers debt trades at yields to maturity across its
curve. Where are Bigtans three securities quoted immediately after the announcement?
ignore the deal risk and the time to closing
Unsure whether the company can recover, you are using the following price
assumptions in your scenarios:
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