Thank you for your inquiry. Can you clarify the corporate structure as well as the exact flow. With all the "Company" and "XYZ" reference, it's not straightforward to follow the ownership structure (to determine consolidation requirements) and ultimately the flow of funds. Howev... Thank you for your inquiry.
Can you clarify the corporate structure as well as the exact flow. With all the "Company" and "XYZ" reference, it's not straightforward to follow the ownership structure (to determine consolidation requirements) and ultimately the flow of funds.

However, if we took a guess from your actual question at the bottom, it seems as if the debt is gone in place of more stock. If so, here's how we would entre this transaction (and YES CFS impact, although nets out):

1) under our debt sweep, in your mandatory payment assumptions, set it equal to negative beginning balance. this effectively wipes out the bonds
2) in CFS, under stock issued, enter the same amount from #1 above; make sure to input this as a positive number.
NET IMPACT at this point: Cash Avaialble / Required Before Debt is now higher (since cash wasn't actually received) and gets negated out at the top of the Debt Sweep in the net calculation of Cash available (row 12 from class) due to the mandatory payment.

BS IMPACT: This will then automatically flow into APIC on the BS and debt goes down, abiding by double entry accounting.

Please do not forget to increase number of shares outstanding to reflect new capital structure. Read More

Sorry, here are all the numbers and factors. The company is privately held but is registered with the SEC. So no need I guess for hiding some of the details.... At year end 12.31.09 the cap structure was: $125 MM ABL Revolver $360 MM Sub notes 9% due 2012 $700 MM Secured Notes 11.75% due 2013 ... Sorry, here are all the numbers and factors. The company is privately held but is registered with the SEC. So no need I guess for hiding some of the details....

At year end 12.31.09 the cap structure was:

$125 MM ABL Revolver
$360 MM Sub notes 9% due 2012
$700 MM Secured Notes 11.75% due 2013

On Jan 11 2010 the company did the following:

Issued $150 MM Sub notes 13.125% due 2014

The $360 MM subs were restructured. The equity sponsor held about $281.4 mm of them and regular investors held the balance. The proceeds of the $150 new notes where used to repay part of the $360 at par. The $218.8 MM (ignore the $225.8 in my first post) remaining (held by an affiliate of the Company's equity sponsor), received I believe, the majority of the equity in the company.

Does this help you answer my question better?

Thanks Read More

I hope you saw my first reply to your message. Another question, how do I handle the new $150MM sub debt issuance on 1/11/10? There does not seem to be a slot for new debt issuances onthe debt sweep. thanks again

To incorporate the issuance of the $150MM, in our blank Tranche 2, in the mandatory repayment line, throw in a positive $150 (to reflect a borrowing, instead of a repayment which would be a negative outflow).

The rest of the transactions stay the same.
Let us know if we missed anything.

Understood. Thanks Two more questions: 1.) I assume we would need to add another line to the CFS -- Proceeds from debt offering = $150MM 2.) Here is my original text again for convenince... question is below $125 MM ABL Revolver $360 MM Sub notes 9% due 2012 $700 MM Secured Notes 11.75% due 20... Understood. Thanks

Two more questions:

1.) I assume we would need to add another line to the CFS -- Proceeds from debt offering = $150MM

2.) Here is my original text again for convenince... question is below

$125 MM ABL Revolver
$360 MM Sub notes 9% due 2012
$700 MM Secured Notes 11.75% due 2013

On Jan 11 2010 the company did the following:

Issued $150 MM Sub notes 13.125% due 2014

The $360 MM subs were restructured. The equity sponsor held about $281.4 mm of them and regular investors held the balance. The proceeds of the $150 new notes where used to repay part of the $360 at par. The $218.8 MM (ignore the $225.8 in my first post) remaining (held by an affiliate of the Company's equity sponsor), received I believe, the majority of the equity in the company.


Second question is: Can you clarify or re-phrase what you meant in terms of how to model the BS and CFS with regard to this debt exchanged for private equity? So far I have:

Cash from FInancing--
$360 MM Issuance of common stock
$150 MM proceeds from debt offering

On the sweep ---
I have a beginning balance sub note tranche balance of $360MM
In the same estimated year I have a -$360 MM Manditory prepayment
In the same period (for the new tranche) I have a positive prepayment for the $150 MM

What am I missing if anything esle to put into the model? Does this break out of the $218.8 MM of equity given (of the $360 MM) matter?

Also, I assume with a private company the share count issue not important yes?

Sorry, that was 4 questions. I am done.

Thanks for all of the help Read More

1) No, you do not need to add another line to CFS. Recall, because you are putting it in Trache 2 repayment/borrowing, it is already incorporated into the mandatory repayment line (net change in repayments) - row 11 on debt sweep. This is already wrapped into the change in debt subtotals! 2) Our in... 1) No, you do not need to add another line to CFS. Recall, because you are putting it in Trache 2 repayment/borrowing, it is already incorporated into the mandatory repayment line (net change in repayments) - row 11 on debt sweep. This is already wrapped into the change in debt subtotals!

2) Our initial response doesn't change! Please think through the entries:
- existing debt down by $360 (put as tranche 1 repayment on Debt Sweep)
- equity up by $218.8 (put in Stock Issuance in CFS)
- new tranche 2 debt of $150 (put as tranche 2 issuance)
- don't forget to increase share count: $218.8 / stock price issued at

3) based on the information provided, doesn't look like anything else required.
BTW, note that 218.8+150 doesn't equal $360, but assume it does for now

4) correct, if no shares b/c private then you aren't calculating EPS anyway, so there is no number of shares line Read More