7) Bright Semiconductor specializes in semiconductors that are used in autos, communication equipment, and industrial machinery, which
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7) Bright Semiconductor specializes in semiconductors that are used in autos, communication equipment, and industrial machinery, which are cyclical industries. This high-yield-rated company's debt structure is complicated because of the many levels of seniority that resulted from the company's 2006 leveraged buyout by a consortium of private equity firms. Below is a simplified depiction of the company's debt structure and some key credit-related statistics.
Bright Semiconductor Financial Information (in Millions) | |
Cash | $1,050 |
Total Debt | $7,611 |
Net Debt | $6,561 |
Interest Expense | $590 |
EBITDA | $990 |
Debt Structure (in Millions) | |
Secured Debt (Bank Loan and Bonds) | $4,899 |
Senior Unsecured Bonds | $1,948 |
Subordinated Bonds | $764 |
Total Debt | $7,611 |
Using the Information Provided, address the following:
- Calculate gross leverage and net leverage, as measured by Debt/EBITDA, through each level of debt, including total debt.
- Why might Bright Co have so much secured debt relative to unsecured debt (both senior and subordinated)?
Related Book For
Auditing and Assurance Services A Systematic Approach
ISBN: 978-0077732509
10th edition
Authors: William Messier Jr, Steven Glover, Douglas Prawitt
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