medium · Debt Capital Markets bond-instruments-structures
An LBO uses $400 million of Senior Secured debt and $200 million of Senior Unsecured debt. The target has $50 million in annual EBITDA. After one year, the company generates $30 million in free cash flow, all of which is used to pay down the Senior Secured debt.
What is the new total leverage multiple?
- 8.0x
- 11.4x
- 10.8x
- 12.0x
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