hard · Private Credit loan-structures-instruments
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
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