2 questions reported in Churchill Asset Management interviews, organised by the group that asks them. Every question carries a model answer and graded feedback on your own attempt.
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Blended return construction, PIK, warrants and intercreditor terms. 2 questions
Mezzanine teams use this arithmetic to check whether reported leverage captures debt that is compounding rather than being paid in cash.
A borrower has $180m of first-lien debt and a $60m mezzanine note with a 10% annual PIK coupon. EBITDA is $40m and does not change. What are total debt and total leverage after one year, assuming no…
Asked when a candidate knows the coupon but not the equity kicker.
Why might a mezzanine lender ask for warrants instead of simply charging a higher coupon?
Write your answer, get it graded on technical accuracy, completeness and communication, and see exactly which mechanic you missed.
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