medium · Private Equity
An LBO is financed with a 'Unitranche' facility of 5.0× EBITDA at S + 600 bps. An alternative structure offers Senior Debt (3.5×) at S + 350 bps and Mezzanine (1.5×) at 12% (all-cash).
If SOFR is 4.0%, which structure has the higher weighted average cost of debt?
- They are identical in cost
- Insufficient information to determine
- The Senior/Mezzanine structure
- The Unitranche structure
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