Debt Schedule
Below, we show how the debt schedule is constructed:
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Details & Assumptions
The debt assumptions from before still stand:
- A Senior Revolving Credit Facility: 3.0x (2.0x funded at closing) 20X1 EBITDA; LIBOR + 400bps Floating Rate; 20X7 maturity; Commitment fee of 0.50% for any available revolver capacity. The RCF is available to help fund operating cash requirements of the business, but only as needed.
- Subordinated Debt: 1.5x 20X1 EBITDA; 12% annual interest (8% cash, 4% PIK (Payment in Kind) interest); 20X7 maturity; $1 million required payment per year.
Additionally, we assume that:
- Interest expense is calculated on average balances, except for PIK interest — which we assume is calculated based on the beginning year Subordinated Debt balance and not the average over the year.
- All cash beyond the minimum cash balance of $5 million and the required debt payments, are used to pay debt creditors in order of priority. So there are no equity payments to share holders.
- LIBOR for 20X2 is 3.00% and is expected to increase by 25bps each year.
- Interest Income on average cash balances is 1%.
Important:
The paydown amounts below come from the Cash Flow Statement. We will show how to calculate these later. This does however result in a circular reference between the various sheets, so ensure you have iterative calculations set to on, in your spreadsheet software.
For more information on how to set iterative calculations, click here: Iterative Calculations
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