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Leveraged AcquisitionsLeveraged Acquisitions
From Theory to Deal Structuringy g
Andrea Diamanti, CFADirector - Financial Sponsor Solutions - UniCredit Corporate & Investment Banking
Agenda
Unicredit OverviewUnicredit Overview
Leveraged Acquisitions Overview
Case study
2
UniCredit Group is "the first truly European bank"
UniCredit Group – at a glance
Employees: over 168,000
UniCredit Group at a glance
Branches: 9,974
Banking operations in 22 countriesg p
International network spanning ~ 50countries
Global player in asset management:~ € 160,2 bn in managed assets
M k t l d i C t l d E t EMarket leader in Central and Eastern Europe leveraging on the region’s structural strengths
3
Leading market position in Italian and European Leveraged Finance
MLA Core Regions (Jan. - Apr. ‘10) MLA Europe (Jan. - Apr. ‘10)
Rank Lender Deal Value (EUR m) No. %shareRank Lender Deal Value
(EUR m) No. %share ( )1 JPMorgan 1365.00 1 21.362 Barclays Capital 627.75 3 9.823 Goldman Sachs 608.08 2 9.513 Deutsche Bank 608.08 2 9.515 UniCredit Group 533.87 3 8.356 Ll d B ki G 523 78 4 8 19
( )1 UniCredit Group 505.13 2 23.882 Goldman Sachs 480.13 1 22.703 Deutsche Bank 480.13 1 22.704 Barclays Capital 480.13 1 22.705 Intesa Sanpaolo 70.00 1 3.316 W tLB 25 00 1 1 18 6 Lloyds Banking Group 523.78 4 8.19
7 Nordea Bank AB 413.83 2 6.478 KKR 208.03 1 3.259 BofA ML 187.05 2 2.93
10 FIH Erhvervsbank A/S 147.78 1 2.31
6 WestLB 25.00 1 1.187 ING 25.00 1 1.188 Credit Agricole CIB 25.00 1 1.189 Avenue Capital LLC 25.00 1 1.18
UniCredit enjoys top positions both in its core makets and in Europe UniCredit enjoys top positions both in its core makets and in Europe
4
Agenda
Unicredit OverviewUnicredit Overview
Leveraged Acquisitions Overview
Case study
5
LBO Overview
Leverage Buy Out
A leveraged buy out (“LBO”): acquisition of a public or private company financed A leveraged buy-out (“LBO”): acquisition of a public or private company financedpredominantly by debt with limited equity.
The debt is typically includes a combination of bank loans, loans from other financialinstitutions and bonds with below investment-grade credit ratings, referred to as high-yieldb dbonds.
Assets of the acquired company act as collateral for the debt and interest and principalobligations are met through cash flows of the refinanced company
LBOs appeal to private equity firms due to the size of acquisitions that can be made with LBOs appeal to private equity firms due to the size of acquisitions that can be made withrelatively small equity investments. Since the acquired company will be leveraged (i.e. largedebt to equity ratio), a suitable LBO target should have certain cash flow characteristics:stability, predictability
The purposes of debt financing for leveraged buyouts are two fold: The purposes of debt financing for leveraged buyouts are two-fold: The use of debt increases (leverages) the financial return to the private equity sponsor until the
WACC is minimised (Modigliani-Miller), thus as long as the cost of debt is below the cost ofequity.
The tax shield of the debt increases the value of the firm enabling the private equity sponsor topay a higher price than would otherwise be possible. Because income flowing through to equityis taxed, while interest payments to debt are not, the capitalized value of cash flowing to debt isgreater than the same cash stream flowing to equity
6
Financing structure
Debt: A Balance Sheet Format
ADVANTAGES OF BORROWING
Tax benefit:
DISADVANTAGES OF BORROWING
Bankruptcy Cost: Tax benefit:Higher tax rates Higher tax benefits
Added Discipline:
Bankruptcy Cost:Higher business risk Higher Cost
Agency Cost: Added Discipline: Debt is a cushion/ debt is a sword
Debt payments reduce managerial discretion in the spending of free
Agency Cost:Greater the separation between stock-holders & lenders Higher Cost
p gcash flows (debt-bonding effect) Loss of Future Financing Flexibility:
Greater the uncertainty about future financing needs Higher Cost
7
LBO Overview
Simple LBO structure
PE HouseVendor loan ?
Equity
EquityNewCoManagement Vendor
Equity
A i t t
SPA
Senior & junior debt
TargetL d
Acquires target
Target (OpCos)Lenders
Debt
8
Source: www.buyouts.org
Corporate Acquisition Overview
Simple Corporate Acquisition structure
Shareholders
Equity
Senior & junior debt
Buyer Vendor
A i t t
SPA
T t
Lenders
Debt
Acquires target
TargetDebtPost-closing Merger
9
Source: www.buyouts.org
Financing structure
Typical structure and key structural issues
Eq it &
Subordination / ranking S it t
Equity CoEquity &
Shareholder loans
Proceeds from equity
Mezzanine
Warrants
Security over assets Security over assets
Financial assistance
Ta iss es
Junior debt PIK Notes
from equity
CovenantGroup
Tax issues Group tax relief (Interest offset)
Accrued interest deduction on PIK
Proceeds from PIK
PIK
Minorities – squeeze-outs (new rule) @ 90%
Bank Co. Bidder Bank loan
Security Security
Mezzanine
Op. Cos. Target
y y
Merger
10
Financing structure LBO
Structuring parameters
% approach EBITDA Multiples Target returns
EquityEquity40-50%
Equity3 - 5x EBITDA
EquityIRR 20-30%2 - 3x Cash
Mezzanine10 15%
Mezzanine1.0x – 1.5x
MezzanineIRR 12-17%1 6x Cash10 - 15% EBITDA
Senior Debt
1.6x Cash Libor +10 -12 %
Senior Debt35 - 50%
Senior Debt3.0 - 4.0x EBITDA
Senior Debt3.5%-5.0% Margin
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Financing structure Comparison
Structuring parameters
EBITDA Multiples – Corporate Acquisitions EBITDA Multiples - LBOs
Equityon Balance Sheet
Equity3 - 5x EBITDA
Mezzanine/HY Bond1.0x
Mezzanine/HY Bond1.0x – 1.5x
EBITDA EBITDA
Senior Debt2.0 - 3.5x EBITDA
Senior Debt3.0 - 4.0x EBITDA
12
Financing structure
Spectrum of Financing Instruments
EQUITY
DEBT
isk
Junior
PIK
Equity
High yield
QUR
i
Second
Senior mezzanine
Junior mezzanine
High yield
Sponsors
Senior debt
Secondlien
Investor SponsorsBanks, CDOs
Hedge Funds, Institutions, CDOs
Mezzanine FundsInvestor
Base
Returns 3 – 5%over
6 – 8%over
10 – 12%over
11 – 15%over
8 – 10%fixed
15 – 20% 20-30% plus
13
Financing structure
Bank review 6/7 key financial ratios some are used as financial covenants in the loan
Measuring debt capacity
Bank review 6/7 key financial ratios, some are used as financial covenants in the loan “Headroom” is the key issue for the bank & due diligence Ratios are calculated on an historic rolling LTM
Total Debt (excl. Inst. Loan stock) / EBITDA
Total Debt / (EBITDA – Capex)
EBITDA / net senior interest
EBITDA / net total interest (inc. Institutional loan stock)
EBITDA – CapEx / Total Cash Interest
CADS / Senior debt service (the ADSCR)( )
CADS / Total Debt & Equity service
Total Debt/ Adjusted Net Worth
14
Financing structure
Senior facility (typical financial covenants)
EBITDA: NET CASH INTEREST TOTAL SENIOR DEBT: EBITDA
Yr 1: 4.00 : 1.0
Yr 3: 2.70 : 1.0
Yr 5: 1.70 : 1.0
Yr 1: 2.10 : 1.0
Yr 3: 2.70 : 1.0
Yr 5: 3.60 : 1.0
Yr 1: 5 25 : 1 0Yr 1: 1 1 : 1 0
CADS: DEBT SERVICE TOTAL DEBT: EBITDA
Yr 1: 5.25 : 1.0
Yr 3: 3.60 : 1.0
Yr 5: 2.50 : 1.0
Yr 1: 1.1 : 1.0
Yr 3: 1.2 : 1.0
Yr 5: 1.3 : 1.0
15
LBO Overview
Sources of Equity Returns
Private Equity investors have three main levers to generate equity returns from investments: (i)deleveraging, i.e. debt reduction from company’s cash flow, (ii) operational improvement growingbusiness EBITDA, (iii) arbitraging valuation multiples between entry and exit of the investment.
Analysis of Equity Returns (Eur mio) Entry ExitEBITDA 100 150
EV / EBITDA 8.0 x 8.5 x
Net Debt 400 300
Equity Value 400 975
Equity Value Created 575
Source: (Eur mio) %Debt reduction 100 17%EBITDA growth 400 70%Multiple arbitrage 75 13%T t l 575 100%Total 575 100%
16
LBO Overview
Source of Equity Returns Leverage and higher exit multiples are harder to control, but operational enhancement hasLeverage and higher exit multiples are harder to control, but operational enhancement has
accounted for around 60% of returns for carry funds Leverage historically has contributed 10% -15% to investment returns Carry funds do not factor in multiple expansion when valuing an opportunity and often assume
multiple contractionmultiple contraction Holding period is an important factor for IRRs, we forecast more than 4-year holding periods
compared to ~3 years from 2004-06
Operating growthIncrease in operating value (Company-
specific growth / improvements)
Multiple Arbitrage(deal-specific differences between
purchase and sale multiples)
Financial Leverage(amplification of equity stakes
in acquisitions)
17
specific growth / improvements)purchase and sale multiples)in acquisitions)
Leveraged Loan Activity – Senior Loans
Senior loan volume trends 2007-2010 reflect shrunking liquidity
Senior Leveraged Loans – Monthly Volumes
€40B
€25B
€30B
€35B
€15B
€20B
€25B
€5B
€10B
€0B
Jan-9
8Apr-
98Ju
l-98
Oct-98
Jan-9
9Apr-
99Ju
l-99
Oct-99
Jan-0
0Apr-
00Ju
l-00
Oct-00
Jan-0
1Apr-
01Ju
l-01
Oct-01
Jan-0
2Apr-
02Ju
l-02
Oct-02
Jan-0
3Apr-
03Ju
l-03
Oct-03
Jan-0
4Apr-
04Ju
l-04
Oct-04
Jan-0
5Apr-
05Ju
l-05
Oct-05
Jan-0
6Apr-
06Ju
l-06
Oct-06
Jan-0
7Apr-
07Ju
l-07
Oct-07
Jan-0
8Apr-
08Ju
l-08
Oct-08
Jan-0
9Apr-
09Ju
l-09
Oct-09
Jan-1
0Apr-
10
LBO Non-LBO
18
Source: LCD European Leveraged Loan Review
Valuation Multiples
Enterprise Value Multiples - LBOs11x
0.38 0.430.82
10x
11x
0.38
0.38 0.51
0.358x
9x
7.81 7.938.42
9.32 9.27
8.39
9.210.35
0.33
0.39
0.340.38
0.410.33
7x
6.977.27
6.93 6.72 6.64 6.48
7.17
5x
6x
4) 5) 3) 0) 7) 2) 6) 7) 7) 0) 5) 6) 8) 7)
1997
(Obs
ervati
ons:
14)
1998
(35)
1999
(33)
2000
(40)
2001
(37)
2002
(52)
2003
(66)
2004
(77)
2005
(87)
2006
(120
)20
07 (1
05)
2008
(56)
2009
(8)
Jan-M
ay 10
(7)
Purchase Price Fees/Expenses
19
Source: www.lcdcomps.com
u c ase ce ees/ pe ses
Financing structure
Equity - Average Equity Contribution to LBOs
60%
50%
60%s
45.4%30%
40%
of T
otal
Sou
rces
25.5%
29.0%33.5% 33.9% 33.9%
31.9%33.9% 33.2%
32.7% 32.9% 32.5%
42.1%
45.4%53.8%
20%
30%
as a
Per
cent
o
4.1% 6.6%2.4% 3.5% 3.7% 3.4% 2.7% 1.7%
6.7%2.7%
7.7%0.8% 1.1%1.0%
0%
10%Equ
ity
0%1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Jan-
May 10
Retained Equity / Vendor Financing Contributed Equity
20
Source: www.lcdcomps.com
Leveraged Loan Activity – Leverage Levels
Leverage significantly grew until Q3 07, thereafter dramatically declining. Since last months of 2009 we have experienced a minor rebound in leverage multiplesexperienced a minor rebound in leverage multiples.
Rolling Average 3-month Debt / EBITDA8.0x
6.0x
4.0x
2.0x
0.0x
Dec-97
Mar-98
Jun-9
8Sep
-98Dec
-98Mar-
99Ju
n-99
Sep-99
Dec-99
Mar-00
Jun-0
0Sep
-00Dec
-00Mar-0
1Ju
n-01
Sep-01
Dec-01
Mar-02
Jun-0
2Sep
-02Dec
-02Mar-
03Ju
n-03
Sep-03
Dec-03
Mar-04
Jun-0
4Sep
-04Dec
-04Mar-
05Ju
n-05
Sep-05
Dec-05
Mar-06
Jun-0
6Sep-0
6Dec
-06Mar-
07Ju
n-07
Sep-07
Dec-07
Mar-08
Jun-0
8Sep
-08Dec
-08Mar-0
9Ju
n-09
Sep-09
Dec-09
Mar-10
1st Lien/EBITDA 2nd Lien/EBITDA Other Debt/EBITDA
21
Source: LCD European Leveraged Loan Review
Leveraged Loan Activity – Structure Complexity
Bullish market from 2005 to 2007 increased structure complexity. Sluggish 2008, 2009 and early 2010 market called for simplified structurefor simplified structure.
Evolution of LBO structures
100%
80%
40%
60%
0%
20%
0%2003 2004 2005 2006 2007 2008 2009 Jan-May 10
Sr Only Sr + 2nd Lien Sr + Mezz Sr + 2nd Lien + Mezz
22
Source: LCD European Leveraged Loan Review
Interest Rates – EURIBOR 3M
Euribor Short Term Trend Q4 08 Euribor Long Term Trend 2003-2009g
LEHMAN COLLAPSESLEHMAN COLLAPSES
Euribor had a spike following the default of Lehman Brothers and deepening of the financial crisis
Source: Bloomberg
p g p g
Following rate cuts by central banks, Euribor is currently at all-time lows
23
Banking Sector’s Risk
CDS spread as a measure of banks’ risk profile has dramatically surged CDS spread widening signals also increased funding costs for the banks A spike after Lehman’s default occurred A spike after Lehman s default occurred CDS currently on the rise
European Banks CDS spread 5-years
24
Source: Bloomberg
Leveraged Loan Activity – Pricing
Pricing rose has been growing since 2008 mainly for senior and mezzanine loans
Average Cost of Funding by LBO Structure
700 bps
400 b
500 bps
600 bps
200 bps
300 bps
400 bps
0 bps
100 bps
p
All Transactions Sr Only Sr + 2nd Lien Sr + Mezz Sr + 2nd Lien + Mezz
2003 2004 2005 2006 2007 2008 2009 Jan-May 10
25
Source: LCD European Leveraged Loan Review
Leveraged Loan Activity – Cost of Leverage Unit
In 2008 US spread by unit of leverage grew to unprecedented levels, European spreads still very high
Spread per Unit of Leverage
180 bps
120 bps
140 bps
160 bps
80 bps
100 bps
120 bps
40 bps
60 bps
4Q98
2Q99
4Q99
2Q00
4Q00
2Q01
4Q01
2Q02
4Q02
2Q03
4Q03
2Q04
4Q04
2Q05
4Q05
2Q06
4Q06
2Q07
4Q07
2Q08
4Q08
2Q09
4Q09
/05/10
4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q3M
E 31/0
Europe U.S.
26
Source: LCD European Leveraged Loan Review
Leveraged Loan Activity – Secondary Market
Market price for leveraged loans rose steadiy following increasing liquidity untile June 2007 (up to above par) Following the start of the crisis and even more after Lehman’s collapse the market had a major downturn (-37% down to g p j (
0.60-0.65 area) Since the trough at the beginning of 2009, the index has been having a marked pick-up to 0.90 area
27
Source: Bloomberg, CSFB
Agenda
Unicredit OverviewUnicredit Overview
Leveraged Acquisitions Overview
Case Study
28
Case Study
Description of Target
Phoenix Group (the “Target”) is a private company already under an LBO and controlled since Phoenix Group (the Target ) is a private company already under an LBO and controlled since 2003 by funds advised by a PE fund (70%) and an industrial operator (30%)
The Target is a leading manufacturer of engine components and systems for the aerospace industry.
Financials
2006PFSales € 1 396
PE FundPE Fund Industrial GroupIndustrial Group
Sales € 1,396
EBITDA € 271
Net financial position € 441
NFP / EBITDA 1 6x
Phoenix Holding S.p.A.
Phoenix Holding S.p.A.
70% 30%
The Target group operates across four business divisions with sales and gross profit split as follows:
NFP / EBITDA 1,6x
Sales 2006f Gross Profit 2006f
Gross Margin
% total Gross Profit
Avio Group Business Divisions (Eur mio) 2006f Margin ProfitCivil Engines 687 139 20% 44%Military Engines 405 148 37% 47%Space 232 35 15% 11%MRO 72 (6) -8% -2%
Divisions (Eur mio)
29
Total 1,396 316 23% 100%
Case Study
Key Valuation and Debt Structuring Considerations
The Target is a leader in its markets of reference being a partner or supplier in all major engine The Target is a leader in its markets of reference being a partner or supplier in all major engine platform and space programs in Europe and US.
The four divisions provide an element of business risk diversification. Civil engines business is cyclical in nature and relying on new aircraft orders by airlines (in turn
led by passengers trends, fuel cost considerations, etc.). However, order backlog provides some visibility typically for 3-4 years ahead. Current up-cycle expected to peak in 2010 followed by downturn.
Military and Space businesses are more stable and linked to governnments’ and supranational Military and Space businesses are more stable and linked to governnments and supranational agencies’ spending for defence and space activities.
MRO is a loss-making divisions calling restructuring or gradual phasing-out. The aerospace industry requires significant investments in R&D as well as Capex making
cashflow available largely dependent on such outlfows.
For both the equity investors and the debt providers achieving a satisfactory deleverage of the structureby 2010 (expected end of the civil market upcycle is crucial)
30
Case Study
Valuation Range
Three methods were used to value Phoenix: DCF Acquisition Multiples Trading Peers’ Multiples Three methods were used to value Phoenix: DCF, Acquisition Multiples, Trading Peers Multiples. The two multiples-based methods were showing wider valuation ranges given the composite
nature of the peers group comprising of defence companies, civil engine manufacturers (both OEMs and suppliers) in Europe and US.
DCF valuation range was in the upper end of values identified under the other two methods.
Valuation Ranges Valuation Ranges
Trading Multiples
AcquisitionMultiples
Trading Multiples
AcquisitionMultiples
0 500 1,000 1,500 2,000 2,500 3,000Eur mio
DCF
0.0 2.0 4.0 6.0 8.0 10.0 12.0EV / EBITDA
DCF
31
Case Study
Debt Structuring Process
Lenders and equity investors wanted to maximize debt quantum subject to achieving adequate Lenders and equity investors wanted to maximize debt quantum subject to achieving adequate deleverage by 2010
Adequate deleverage means maintaining a minimum cushion between value of the company and existing net debt. Such cushion is a fair-value equity acting as security for the debt lenders.
Industry peers’ valuation multiple at the time of the earlier trough of downcycle were approximately 6.0x EV / EBITDA.
The debt structure was then designed, based on company’s cash flow, to provide an expected valuation cushion of at least 40% to lenders in 2010.valuation cushion of at least 40% to lenders in 2010.
Further structuring constraints were: Senior debt was set to be max 50% of the overall structure Maintaining a fixed charge cover of at least 1.25x until 2010 Maximum debt refinancing risk acceptable at final debt maturity of 1.0x-1.2x EBITDA Type of subordinated debt instrument to minimise cost of debt.
32
Case Study
Debt Structuring Process (1 / 2)
STEP 1 d bt it l i b d th E it S ’ B i Pl STEP 1 – run a debt capacity analysis based on the Equity Sponsors’ Business Plan.
Phoenix Debt Capacity Analysis (Eur mio)Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16Sales 1,522 1,621 1,713 1,829 1,860 1,925 2,087 2,234 2,368 2,486EBITDA 300 325 348 370 383 414 448 481 522 548Unleveraged CF (after tax) 208 206 221 205 247 253 275 295 315 307
Interest Costs 153 152 147 144 141 137 130 124 95 56CF for Debt Repayment 55 54 74 61 106 116 145 171 220 251Cumulated CF for Debt Repayment 1,253
STEP 2 – check suitable valuation cushion would exist in 2010.
Debt to refinance at final maturity* 549Total Debt Capacity 1,802* at 1.2x EBITDA 2016
Phoenix Leverage and Cushion ProfileDec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16EV @ 6.0x EBITDA multiple 1,802 1,951 2,086 2,222 2,297 2,484 2,688 2,887 3,131 3,287Expected Net Debt 1,699 1,660 1,602 1,558 1,469 1,371 1,245 1,094 895 666Valuation Cushion 103 291 484 664 828 1 114 1 443 1 793 2 236 2 621Valuation Cushion 103 291 484 664 828 1,114 1,443 1,793 2,236 2,621
as % of Net Debt 6% 18% 30% 43% 56% 81% 116% 164% 250% 393%
Net Debt / EBITDA 5.7 x 5.1 x 4.6 x 4.2 x 3.8 x 3.3 x 2.8 x 2.3 x 1.7 x 1.2 x
33
Case Study
Debt Structuring Process (2 / 2)
STEP 3 – tranching of debt amount to have max 50% sources as senior debt and fixed charge of at least 1.25x until 2010.
Phoenix Fixed Charge Cover AnalysisDec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16A Unleveraged CF (after tax) 208 206 221 205 247 253 275 295 315 307B Interest Costs 153 152 147 144 141 137 130 124 95 56C Debt Repayment 10 10 27 21 38 37 46 504 504 669
Senior A 10 10 27 21 38 37 46 0 0 0Se o 0 0 38 3 6 0 0 0Senior B 0 0 0 0 0 0 0 504 0 0Senior C 0 0 0 0 0 0 0 0 504 0Second Lien 0 0 0 0 0 0 0 0 0 210Mezzanine 0 0 0 0 0 0 0 0 0 459
Fixed Charge Cover (A /( B+C)) 1.28 x 1.27 x 1.27 x 1.24 x 1.38 x 1.46 x 1.56 x 0.47 x 0.53 x 0.42 x
34
Case Study
Debt Structuring Process (2 / 2) Final structure, sources / uses of funds and debt instrument pricingg
Sources of funds € mio x EBITDA IFRS % Uses of funds € mio %
Cash - - Cash Left in Business (Overfunding) 85 3.2%
DebtSenior A Term Loan 200 0.7 x 7.5% Purchase Price 2,045 76.4%Senior B Term Loan 555 2.1 x 20.7% Debt refinancing 441 16.5%Senior C Term Loan 555 2.1 x 20.7% General Corporate Purposes - - Revolving Credit Facility (drawn 25 0.1 x 0.9% Total Consideration 2,485 92.9%
Total Senior Debt 1 335 4 9 x 49 9%Total Senior Debt 1,335 4.9 x 49.9%Transaction Costs 105 3.9%
Second Lien 210 0.8 x 7.9% Total Uses 2,675 100.0%Mezzanine 280 1.0 x 10.5%
Total Debt 1,825 6.7 x 68.2%On / Off On
Equity B / C % 60 0% 1 6Equity B / C % 60.0% 1.6Shareholders' Loan 100 0.4 x 3.7%Ordinary Shares 750 2.8 x 28.0% on the B & C tranches as these
Total Equity 850 3.1 x 31.8% w/o Italian offices.- - - -
Total Sources 2,675 9.9 x 100.0%
Debt Instruments Cash Magin PIK Margin Tenor
Senior A Term Loan Euribor + 2.00% 7 yrsSenior B Term Loan Euribor + 2.50% 8 yrsSenior C Term Loan Euribor + 3.00% 9 yrsSenior RCF Euribor + 2.125% 7 yrsSecond Lien Euribor + 4.750% 10 yrs
Commitment Fee
0.50%
35
Mezzanine Euribor + 4.000% 5.000% 10 yrs
Case Study
Sponsors’ IRR
Equity Sponsors were expecting adequate returns from their investment based on their business plan and the offered debt financing.
Internal Rate of Return (IRR) Exit Year Year 3 Year 4 Year 5Exit Multiple Dec-09 Dec-10 Dec-11
Equity Investor13.0% 14.6% 14.3%22 7% 21 2% 19 1%
8.2 X EBITDA9 2 X EBITDA 22.7% 21.2% 19.1%
31.1% 26.9% 23.3%10.2 X EBITDA9.2 X EBITDA
Investor's Money Multiple Exit Year Year 3 Year 4 Year 5Exit Multiple Dec-09 Dec-10 Dec-11
Equity Investor1.4 x 1.7 x 1.9 x1.8 x 2.2 x 2.4 x2.3 x 2.6 x 2.8 x
8.2 X EBITDA9.2 X EBITDA
10.2 X EBITDA
36
Contact details
Andrea Diamanti, CFADirectorUniCredit Corporate & Investment BankingFinancial Sponsor Solutions GroupFinancial Sponsor Solutions Group
Email: [email protected]
37
