medium · Debt Capital Markets credit-ratings-risk
A credit agreement defines EBITDA to include 'Pro Forma' savings.
If a company acquires a peer for $200 million (all debt), adding $40 million in actual EBITDA and $10 million in synergies, how does its 4.0x leverage change if it started with $800 million debt and $200 million EBITDA?
- It remains exactly 4.0x.
- It decreases to 3.80x.
- It increases to 5.00x.
- It increases to 4.17x.
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