medium · Private Credit & Debt loan-structures-instruments
A mezzanine lender provides a $20M facility to a company with $40M in EBITDA. The terms are 8% cash interest, 5% PIK interest, and warrants for 1% of fully diluted equity. After 5 years, the company is sold for an EV of $572M after growing EBITDA to $52M.
If senior debt of $180M is repaid first, what is the value of the warrants at exit?
- $2.00M
- $3.66M
- $5.72M
- $3.92M
Sign up free to see the explanation and track your rank →
More Private Credit & Debt loan-structures-instruments practice
- What is the blended interest rate paid by the borrower?
- What is the blended interest rate margin the borrower pays on the total facility?
- A private credit fund is evaluating a 'Unitranche' loan for… — What is the borrower's expe
- A fund manager is valuing a senior loan to a private mid-mar… — Under ASC 820, how is this
- Which group is the fulcrum?
- What is the indicative margin for the 'last-out' lender?
- What is the primary risk factor the lender evaluates?
- If the company fails and liquidates for $2M after two years, what was the primary risk rea