medium · Private Credit market-sourcing-sponsor-dynamics
An LBO sponsor performs a 'Dividend Recapitalization'. The portfolio company has EBITDA of $60 million and original net debt of $120 million.
If they raise an additional $90 million in debt to pay a dividend, what is the new Interest Coverage Ratio (ICR) assuming a 6% interest rate on all debt?
- 5.55×
- 8.33×
- 4.76×
- 3.50×
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