hard · Debt Capital Markets
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, because the 6.19x actual leverage exceeds the threshold, and bridge exclusions only apply to revolving credit lines.
- Yes, because the bridge facility is a debt obligation that must be counted toward the total leverage of the enterprise.
- No, because portability is automatically granted for any bridge financing intended to be refinanced in the capital markets.
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