What would the financial impact be to the holder

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Reference no: EM131560378

BadRide Company provides bussing services and is distressed. Its has no cash, an undrawn $50m revolver, $50m secured term loan, and $200m of 12% bonds trading at 60. The bonds are due to pay their coupon tomorrow and are still trading with accrued interest. If at the last minute, the company draws down its entire revolver and decides to file for bankruptcy. What would the financial impact be to the holder? How much would you expect a buyer to pay for the bonds? If you thought the company was worth 7x EBITDA instead of 6x what would the bonds be worth? Other Info: Badco has $25M of ebitda Similar companies trade at 6x EBITDA. Bankruptcy costs will be $6m and bankruptcy should last 18 months.

Reference no: EM131560378

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