United Kingdom
SUPPLEMENT - THE 2005 GUIDE TO PRIVATE EQUITY AND VENTURE CAPITAL - January 13, 2005
Maximizing debt quantum has always been a consideration for
sponsors in the private equity market when weighing up financing
proposals. Unprecedented levels of liquidity across the bank
markets, sponsors' desire to invest their capital sooner rather
than later, and vendors driving highly competitive auction
processes have all contributed to rising LBO asset prices. In these
market conditions, debt quantum has become of paramount
importance.
Constraints on debt quantum arise from modelling the target's
cashflows, reflecting the ongoing risks associated with the
performance of the business. The value of the real estate on the
target's balance sheet is not taken into account in assessing the
ability of the business to service debt going forward.
Value locked up in a property portfolio can be released
(post-whitewash) to assist in financing a bid by property
financiers willing to lend to a bankruptcy-remote, property-owning
SPV on a loan-to-value basis backed by a flow of lease rentals from
the...
The rest of this article is available to subscribers only. Subscribe today for full access to this article.
Alternatively take a free trial, giving you access for 48 hours*.
If you are already a subscriber, please log in below to access the rest of this article.
*some articles may be excluded.