hard · Debt Capital Markets bond-instruments-structures
In a Bridge-to-Bond financing scenario, a sponsor acquires a target using a $500 million Senior Bridge Facility. The target's existing bonds have a portability threshold of 6.0x. Pro forma for the deal, Net Debt is $1.3 billion and EBITDA is $210 million. However, the portability clause specifies that 'Net Debt' excludes any Bridge Facilities with a maturity of less than one year.
Is the CoC put triggered?
- No, because the adjusted Net Debt for the test is $800 million, resulting in a 3.8x leverage ratio.
- Yes, the 6.19x actual leverage exceeds the threshold, and bridge exclusions apply only to revolving facilities.
- Yes, the bridge facility is a debt obligation counted toward the enterprise's total leverage.
- No, portability is automatically granted for bridges to be refinanced in the bond market.
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