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Supplementary software
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Reference no. UVA-F-1652X
Authors: Susan Chaplinsky
Published by: Darden Business Publishing
Originally published in: 2011
Revision date: 05-Jun-2014
Format: .xlsx
Data source: Published sources

Abstract

This software is to accompany the case. This case examines issues surrounding the choice of financing arrangements for the acquisition of Radiologix in July 2006. The case follows Mark Stolper, the CFO of RadNet, as he considers how to raise the $363 million in funds necessary to finance the acquisition. When completed, the combined firms will be the largest private diagnostic imaging provider in the United States. When Stolper joined RadNet in 2003, he confronted a company with 'too much debt, and the wrong kind of debt.' His goal is to finance the acquisition in a way that further enhances the financial strength and operating flexibility of the company. Given the large size of funding required, the firm will unlikely be able to fund the entire transaction with first lien or bank debt. His financial advisors differ in their recommendations for how to raise the remaining funds - one suggests using second lien debt, and the other, high-yield debt. The purpose of the case is to familiarize students with frequently encountered types of debt financing that are used to finance mergers and acquisitions and other corporate transactions. The case provides information on the distinctions among first lien, second lien, and high-yield debt in relation to their price, availability, flexibility of covenants, repayment ease, and composition of likely investors. The case is designed for use in courses that cover corporate financing, M&A, and debt financing.

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Abstract

This software is to accompany the case. This case examines issues surrounding the choice of financing arrangements for the acquisition of Radiologix in July 2006. The case follows Mark Stolper, the CFO of RadNet, as he considers how to raise the $363 million in funds necessary to finance the acquisition. When completed, the combined firms will be the largest private diagnostic imaging provider in the United States. When Stolper joined RadNet in 2003, he confronted a company with 'too much debt, and the wrong kind of debt.' His goal is to finance the acquisition in a way that further enhances the financial strength and operating flexibility of the company. Given the large size of funding required, the firm will unlikely be able to fund the entire transaction with first lien or bank debt. His financial advisors differ in their recommendations for how to raise the remaining funds - one suggests using second lien debt, and the other, high-yield debt. The purpose of the case is to familiarize students with frequently encountered types of debt financing that are used to finance mergers and acquisitions and other corporate transactions. The case provides information on the distinctions among first lien, second lien, and high-yield debt in relation to their price, availability, flexibility of covenants, repayment ease, and composition of likely investors. The case is designed for use in courses that cover corporate financing, M&A, and debt financing.

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