Structuring Leveraged & Mezzanine Finance - Johannesburg - Financial - Corporate Finance

Dates	Location	Price	Add dates to my diary	Brochure	Register
9-11 Oct 2012	Johannesburg, South Africa	£2,850.00	Add dates	Download	Register now

A 3-Day Intensive Programme Featuring:

Identifying suitable LBO candidates.
Understanding LBO structuring.
Analysis of the debt structure including documentation.
Use of Holdcos and Opcos.
Addressing financial assistance.
Modelling the cash flows.
Computing the credit ratios.
Mezzanine and non-senior debt financing, warrant calculation.
Other hybrid instruments such as Holdco PIKS.
Senior debt structure: margin grid, loan life, sweep, working capital clean down.
Whole business securitisation.

Aims and Objectives

The aim of this course is to provide participants with exposure to leveraged and mezzanine financing techniques in the context of M&A and private equity structures. Delegates will be introduced to international practice in executing leveraged transactions, which will include due diligence, accounting issues and valuation techniques. Case studies will include opportunities to structure leveraged finance transactions.

Course Benefits

By attending the course participants will:

Examine the principles involved in structuring leveraged buy-out transactions;
Develop their understanding of modelling the cash flows in a leveraged transaction involving mezzanine financing techniques;
Improve their appreciation of the structuring issues in a LBO transaction;
Understand how LBO investors are remunerated;
Obtain a greater awareness of how to structure and finance mergers and acquisitions generally;
Appreciate what Holdcos and Opcos are used for;
Understand how to structure a highly leveraged transaction including documentation.

Methodology

The course will use real life case studies and examples of transactions to develop participants’ understanding of the techniques being discussed. Most of the case studies are designed to encourage delegates to think more closely about the issues involved and discuss them as a group. Some case studies will require participants to bring laptops to manipulate Excel spreadsheets. The course is designed to improve the participants’ skills in acquisition analysis, structuring and valuation. Many examples will be provided to illustrate the key principles and to develop participants’ understanding of real-life applications.

Day 1

LBO structuring

Session 1

Introduction to Leveraged buy-outs

Suitable candidates for LBO.
Establishing the amount of debt that can be used.
Assessing the type of debt that can be used.
Computing the blended cost of capital.
LBO characteristics.
Early transaction steps.
Significance of due diligence in the LBO process.

Case: International acquisition using bridge financing.

Session 2

Leveraged buy-outs

Different types of transaction: LBO, MBO, MBI, BIMBO, SBO, LBU, P2P, etc.
Acquisitions suitable for leveraged finance.
Deal structuring: equity and debt (including senior and mezzanine debt).
Refinancing with bonds or other capital instruments post acquisition.
The leveraged buy-out process.
Lending practices pre-crunch.
Drivers for senior and mezzanine lenders.

Case: A large multinational LBO.

Session 3

LBO managers’ objectives.
Structure of the investors’ participation.
Limited partnership.
Remuneration.
Carried interest.
Money multiples, IRR.
Sources of value added.
Business restructuring.

Case: Computation of returns on an investment.

Session 4

The LBO process.
Drivers of performance.
Exit mechanisms.
Due diligence aspects.
Legal boilerplate.
Secondary buy-out due diligence issues.
Management warranties and indemnities.
High yield bonds as an alternative to mezzanine.

Case: High yield bond issue.

Day 2

Credit ratios in LBO deals

Session 1

Documentation.
Term sheets.
Margin grid.
Purchase agreements.
Warranties and representations.
Covenants.
Internal LBO investor approval process.

Case: Term sheet analysis.

Session 2

Structuring objectives.

Priority: senior/junior.
Access to security.
Debt and its impact on equity returns.
Envy ratios, ratchets.
Senior equity.

Case: Envy ratio calculation.

Session 3

Exit routes.
Trade sale.
IPO.
Secondary buy-out.
Leveraged recapitalisation.

Case: leveraged recapitalisation.

Session 4

Key finance structure considerations.

Seniority of lenders.
Financial assistance problems.
Access to security.
Subordination: structural versus contractual.
Generation of tax shelter.
Debt pushdowns.
Inter-creditor agreement.
Using warrants to remunerate mezzanine providers.

Case: Review of inter-creditor structure.

Day 3

Modelling and other financing options

Sessions 1 and 2

LBO cash flow model.

Cash flow projections.
Senior tranches.
Average loan life.
Setting loan repayments.
Using the cash sweep.
Building in covenants.
Calculating the warrant package.
Computing the LBO investor’s returns.
Check the credit ratios.
Check the security structure.

Case: Build model, compute the key credit metrics.

Session 3

Whole business securitisation.

Principles of securitisation.
Advantages: cost.
Structural issues.
Usage.

Case: Welcome Break, motorway service station operator.

Session 4

Other mezzanine financing instruments: hybrids. convertibles.

PIK notes +/- warrants.
Holdco PIKs.
Subordinated debt for financial institutions.
High yield debt.
Convertibles.
Hybrid securities.
Restrictions, covenant structures.

Case: High yield bond issue.

Johannesburg Hotel, Johannesburg, South Africa

This programme takes place on a non-residential basis at a central Johannesburg hotel. Non-residential course fees include training facilities, documentation, lunches and refreshments for the duration of the programme. Delegates are responsible for arranging their own accommodation, however, a list of convenient hotels (many at specially negotiated rates) is available upon registration.

Paul Richards
Paul Richards graduated from Cambridge University in mathematics and has a Masters degree in business administration from London Business School. He is also a CFA charter holder, an Associate of the Chartered Institute of Bankers, a Member of the Association of Corporate Treasurers and a Fellow of UKSIP.

Paul has more than 20 years investment banking experience specialising in domestic and international corporate finance at UBS (Warburg), HSBC and Map Securities (part of Skandia Insurance and Mapfre, Spain). He was also the chief executive of the London merchant banking operation of Credit Industriel et Commercial, a major French banking group.

As a result of this experience, Paul has extensive first hand experience of: Mergers and acquisitions; IPOs; bond issues; secondary market issues; privatisation; debt syndications; corporate treasury; equity valuation; investment analysis; security and derivative valuation; private equity; modelling; corporate governance; and compliance.

Paul won the 2004 Wincott Foundation Prize for his article "Lessons in shareholder value" on the boom and bust in new economy stocks, published in Professional Investor (the journal of the UK Society of Investment Professionals - the UK member society of the CFA Institute). He has taught MBAs and Masters to Finance students at Cass and Cranfield Business Schools for more than 12 years in a range of financial disciplines; and has trained staff at major City houses and in banks on different continents.
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Course Instructor: Paul Richards