Main strengths and weaknesses of the radiologix acquisition

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1. What are the main strengths and weaknesses of the Radiologix acquisition? How do these perceptions affect the financing of the acquisition?

2. RadNet could conceivably utilize both bank debt and high-yield (HY) debt. What are some of the distinctions between bank debt and HY debt?

3. If the first-lien debt (FLD) is insufficient to fund the acquisition, how should the firm close the funding gap - with second-lien debt (SLD) or HY debt?

4. Assume the $360 million in acquisition debt financing is composed of $225 million in FLD and $135 million in SLD. Put together a table with the sources and uses of funds for the transaction. What will the pro-forma balance sheet for the combined firms look like after completion of the merger financing?

5. Based on the comparables in Exhibit 10, how competitive is GE's offer of $225 million in FLD at L+350 and $135 million in SLD at L+750?

6. If RadNet uses $225 million in FLD at L+350 and $135 million in SLD at L+750, based on the projections in Exhibit 11, can it do so and stay within the FLD and SLD covenants?

7. If the merged firm's performance falls closer to its historical performance (2% revenue growth and 18% margins), how high is the likelihood of default?

Reference no: EM133020094

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