medium · Investment Banking rx-dcm-ecm
A $200 million Term Loan B is issued at 99.0 OID. The transaction fees are $4 million.
On the Statement of Cash Flows, where do these two items appear at the time of closing?
- The $2 million OID appears as a non-cash add-back within the Operating Activities section at the time of the debt's initial closing.
- Investing Activities: $198 million net cash inflow from debt proceeds; Operating Activities: $4 million fee outflow recorded.
- Financing Activities: Net inflow of $194 million (represented as $198 million from debt issuance less $4 million in fees).
- Financing Activities: $200 million gross inflow; Operating Activities: $6 million outflow, combining both the OID discount and fees paid.
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