hard · Private Credit & Debt
A borrower in the industrial services sector has an LTM EBITDA of $40M. The PE sponsor is acquiring the company for $360M (9.0× EBITDA), funded with $160M of first-lien debt and $40M of second-lien debt. The first-lien carries an interest rate of SOFR + 450 bps, and the second-lien is at SOFR + 850 bps.
If SOFR is 5.0% and the lender's FCCR covenant requires a minimum of 1.20×, what is the maximum amount of maintenance Capex the company can incur before breaching the covenant, assuming no taxes or principal amortization?
- 15.28 million
- 19.6 million
- 11.20 million
- 24.72 million
Sign up free to see the explanation and track your rank →
More Private Credit & Debt practice
- What is the fund's TVPI (Total Value to Paid-In) multiple?
- If the current SOFR rate drops to 0.25%, what is the all-in interest rate the borrower mus
- What is the Dividend Coverage ratio?
- What is the blended interest rate paid by the borrower?
- What is its current Debt-to-Equity (Leverage) ratio?
- A borrower's credit agreement includes a 'Negative Pledge'.… — Is this allowed?
- A BDC (Business Development Company) is required to distribu… — What is the primary benefi
- An investor is reviewing a fund's performance and sees a DPI… — What does this suggest abo