J Crew LBO
January 24, 2023 | Author: Anonymous | Category: N/A
Short Description
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Description
Target Company Name J. Crew Group, Inc.
Last Fiscal Year 1/29/2011
Sub-Header $ in millions, except per share
Days in Year 365
Leveraged Buyout of J. Crew Group, Inc. $ in millions, except per share
Transaction Assumption Current Share Price Offer Price Premium Offer Price Per Share Diluted Shares Outstanding Offer Value
$36.49 20.00% $43.79 65.9) $2,886.4
+ Total Debt + Preferred Securities +Minority Interests - Equity in Affiliates - Cash & Equivalents Transaction Value
381.3) $2,505.2
Transaction Multiples Transaction Value / Sales Transaction Value / EBITDA Transaction Value / EBIT
Credit Statistics Debt / EBITDA EBITDA / Interest (EBITDA - CapEx) / Interest
Sources of Funds Cash from Balance Sheet Revolving Credit Facility Term Loan B Senior Subordinated Notes Rollover Equity Sponsor Equity Total Sources of Funds Uses of Funds Purchase of Equity Debt Refinancing Financing Fees Transaction Expenses Total Uses of Funds
Pro Forma 1.5 9.5 11.7
Pro Forma 5.5
Debt Repayment Cumulative Free Cash Flow Delevering - Senior Secured Debt Delevering - Subordinated Debt
Amount $331.3 362.7) 362.7) 725.4) 100.0) Err:522 Err:522 Amount $2,886.4 36.3) 1.00% Err:522 Err:522
IRR Returns EBITDA Exit Multiple Year0 8.5 0.17 9.5 0.2 .24 4 10.5 0.3 .31 1
Err:5 :52 22 Err:522 Err:522
Year1 Err:5 :52 22 Err:522 Err:522
3.6 2.9 2.4
Year0 Err:522 Err:522 -
Err:522 Err:522 -
Year1 Err:522 33.69% 0.00%
Year1 3.0 3.3 2.7
$357.1 49.23% 0 0..00%
2.5 3.9 3.1
0.18 22.5 .56 6% 26.9 .94 4%
Year2 2.0 4.6 3.7
Year3 $487.2 67.17% 0. 0.00%
$636.3 87.72% 0. 0.00%
Income Statement
Sales COGS, excluding D&A Gross Profit SG&A EBITDA Depreciation & Amortization EBIT Interest Expense / (Income) Pretax Income Taxes
Pro Forma $1,722.2 925.4) $796.8 533.0) $263.8 49.8) $214.0
$1,877.2 1,008.1) $869.2 580.1) $289.1 58.6)
Year0 $2,036.8 1,093.8) $943.0 629.4) $313.7 63.2)
$2,199.7 1,181.3) $1 $1,018.5 679.7) $338.8 68.0)
Year1 $2,364.7 1,269.9) $1 $1,094.9 730.7) $364.2 72.7)
$2,530.2 1,358.7) $ $1 1,171.5 781.8) $389.7 77.5)
Year3 $2,694.7 1,447.1) $1 $1,247.7 832.7) $415.0 82.3)
$2 $230.5 Err:522 Err:522 Err:522
$ $2 250.4 Err:522 Err:522 Err:522
$2 $270.8 116.0) $154.8 61.9)
$ $2 291.4 109.4) $182.1 72.8)
$ $3 312.1 100.6) $211.5 84.6)
$3 $332.7 89.5) $243.2 97.3)
Net Income Ratios & Assumptions Sales Growth Gross Profit Margin SG&A (% sales) D&A (% sales) Tax Rate
0.5 0.3 0.03
Err:522
Err:522
$92.9
$1 $109.2
$1 $126.9
$1 $145.9
9.00% 46.30% 30.90% 2.90% 40.00%
8.5% 46.3% 0.3 2.9% 40.0%
8.0% 46.3% 0.3 2.9% 40.0%
7.5% 46.3% 30.90% 2.9% 40.0%
7.0% 46.3% 30.90% 2.9% 40.0%
6.5% 46.3% 30.90% 2.9% 40.0%
Working Capital Schedule
Pro Forma
Year0
Year1
Projected Years Year3
Current Assets Inventories Other Current Assets Total Current Assets
214.4) 39.1) $253.5
233.7) 43.2) $276.8
253.5) 46.8) $300.4
273.8) 50.6) $324.4
294.3) 54.4) $348.7
314.9) 58.2) $373.1
335.4) 62.0) $397.4
Current Liabilities Accounts Payable Other Current Liabilities Total Current Liabilities
147.1) 123.6) $270.7
160.2) 135.2) $295.3
173.8) 146.6) $320.5
187.7) 158.4) $346.1
201.8) 170.3) $372.0
215.9) 182.2) $398.1
229.9) 194.0) $424.0
Net Working Capital
$17.1
$18.5
$20.1
$21.7
$23.3
$25.0
$26.6
Ratios & Assumptions Days Inventory Held Other Current Assets (% sa Days Payable Outstanding Other Liab (% sales)
84.6) 0.0 58.0) 0.1
84.6 2.30% 58.0) 7.20%
84.6) 0.0 58.0) 0.1
84.6) 2.30% 58.0) 7.20%
84.6) 2.30% 58.0) 7.20%
84.6) 2.30% 58.0) 7.20%
84.6) 2.30% 58.0) 7.20%
Cash Flow Statement
Net Income Add: Depreciation & Amortization Add: Decrease / (Increase) in NWC Less: Capital Expenditures Free Cash Flow for Debt Paydown Assumptions CapEx (% sales)
Year0 Err:522 Err:522 58.6) 63.2) 1.4) 1.6) 61.1) 56.3) Err:522 Err:522
3.00%
3.00%
Year1 $92.9 $109.2 68.0) 72.7) 1.6) 1.6) 66.0) 70.9) $96.4 $112.7
3.00%
Projected Years Year3 $126.9 $145.9 77.5) 82.3) 1.6) 1.6) 75.9) 80.8) $130.2 $149.0
3.00%
3.00%
3.00%
Debt & Interest Schedule
Free Cash Flow for Debt Paydown Mandatory (Repayments) Ca Cash sh Flo low w Av Avai aila labl ble e fo forr Opti ption onal al Pay ayd d LIBOR Curve Revolving Credit Facility Term Size
0.030
7 years 362.7)
Year0 Err:522 Err:522 3.6) Err:522 Err:5 rr:52 22 Err:5 rr:52 22 0. 032
0. 033
Year0 $96.4 $112.7 3.6) 3.6) $9 $92. 2.8 8 $10 109. 9.0 0 3.45%
3.60%
Projected Years Year3 $130.2 $149.0 3.6) 3.6) $12 126. 6.5 5 $14 145. 5.4 4 3.75%
3.90%
Beginning Balance Issuance / (Repayment) Ending Balance
362.7) Err:522 Err:522
Err:522 Err:522 Err:522
Err:522 92.8) $129.2
129.2) 109.0) $20.1
20.1) 20.1) -
-
Average Balance Interest Rate Interest Expense
Err:522 0. 067 Err:522
Err:522 6.80% Err:522
175.6) 6.95% $12.2
74.7) 7.10% $5.3
10.1) 7.25% $0.7
7.40% -
0.01
0.01
1.00%
1.00%
1.00%
1.00%
Beginning Balance Mandatory (Repayment) Optional (Repayment) Ending Balance
362.7) 3.6) Err:522 Err:522
Err:522 Err:522 Err:522 Err:522
Err:522 3.6) $351.8
351.8) 3.6) $348.2
348.2) 3.6) 106.4) $238.1
238.1) 3.6) 145.4) $89.1
Average Balance Interest Rate Interest Expense
Err:522 0. 077 Err:522
Err:522 7.80% Err:522
353.6) 7.95% $28.1
350.0) 8.10% $28.3
293.2) 8.25% $24.2
163.6) 8.40% $13.7
Beginning Balance Optional (Repayment) Ending Balance
725.4) $725.4
725.4) $725.4
725.4) $725.4
725.4) $725.4
725.4) $725.4
725.4) $725.4
Average Balance Interest Rate Interest Expense
725.4) 0.10 $72.5
725.4) 10.00% $72.5
725.4) 10.00% $72.5
725.4) 10.00% $72.5
725.4) 10.00% $72.5
725.4) 10.00% $72.5
Cash Beginning Balance Excess Cash Flow Ending Balance
50.0) Err:522 Err:522
Err:522 Err:522 Err:522
Err:522 $50.0
50.0) $50.0
50.0) $50.0
50.0) $50.0
Average Balance
Err:522
50.0)
50.0)
50.0)
50.0)
50.0)
Interest Rate Interest (Income)
2.00% Err:522
0.0 1.0)
0.0 1.0)
2.00% 1.0)
2.00% 1.0)
2.00% 1.0)
Interest Expense, Net Revolving Credit Facility Term Loan B Senior Subordinated Notes Amortization of Deferred Financing Fee Cash Interest Income Interest Expense, Net
Err:522 Err:522 72.5) 4.2) Err:522 Err:522
Err:522 Err:522 72.5) 4.2) 1.0) Err:522
12.2) 28.1) 72.5) 4.2) 1.0) $116.0
5.3) 28.3) 72.5) 4.2) 1.0) $109.4
0.7) 24.2) 72.5) 4.2) 1.0) $100.6
13.7) 72.5) 4.2) 1.0) $89.5
5.4) 7.3) 23.6) $36.3
Fees 0.78 1.04 2.36 $4.17
36.27)
32.10)
19.58)
15.41)
Term Loan B Term Size Annual Amortization
Senior Subordinated Notes Term Size
Deferred Financing Fees Revolving Credit Facility Term Loan B Senior Subordinated Notes
Beginning Balance
7 years 362.7) 1.00%
10 years 725.4)
T Te erm 7 years 7 years 10 years
Amortization
27.93)
23.76)
4.17) $32.1
Annual Amortization Ending Balance
4.17) $27.9
4.17) $23.8
4.17) $19.6
4.17) $15.4
4.17) $11.2
Returns Analysis Equity:
Err:522
EBITDA
Year0
Projected Years Year3
Year1
$289.1
$313.7
$338.8
$364.2
$389.7
$415.0
Implied Enterprise Value @ an Exit Multiple of: 8.5 $2,456.6 $2,745.7 9.5 10.5 $3,034.8
$2,665.4 $2,979.1 $3,292.7
$2,878.6 $3,217.4 $3,556.2
$3,094.5 $3,458.7 $3,822.9
$3,311.1 $3,700.8 $4,090.5
$3,526.4 $3,941.4 $4,356.3
Less: Debt Plus: Cash
Err:522 Err:522
Err:522 Err:522
1,206.3) 50.0)
1,093.7) 50.0)
963.5) 50.0)
814.5) 50.0)
Implied Equity Value @ a Multiple of: 8.5 9.5 10.5
Err:522 Err:522 Err:522
Err:522 $1,726.3 $2,040.0
$1,722.3 $2,061.1 $2,399.8
$2,050.9 $2,415.0 $2,779.2
$2,397.6 $2,787.3 $3,177.0
$2,761.9 $3,176.9 $3,591.9
Implied Sponsor Returns @ Exit Multiple of: 8.5
Err:522
Err:522
17.19%
17.66%
17.51%
17.12%
Err:5 :52 22 Err:522
Err:5 :52 22 38.06%
24.4 .41 1% 30.89%
Err:522 26.94%
21.10% 24.31%
19.88% 22.36%
9.5 10.5
Sensitivity Analysis
0.21 6.00% 0.1
Hurdle Rate 20.0%
Premium Paid
12.00% 14.00% 16.00% 18.00% 20.00% 22.00% 24.00% 26.00% 28.00% 30.00% 32.00% 34.00% 36.00% 38.00% 40.00% 42.00%
Exit Multiple Sensitivity - Assuming Exit in Year 5 Exit Multiple 7.5 8.5 9.5 10.5 11.5 22.43% 26.85% 30.73% 34.19% 37.33% 20.86% 25.22% 29.05% 32.47% 35.58% 0.1 19.41% 23.72% 27.50% 30.88% 18.05% 22.31% 26.05% 29.39% 32.42% 16.78% 21.00% 24.70% 28.00% 31.00% 15.59% 19.77% 23.43% 26.70% 29.67% 14.47% 18.60% 22.23% 25.47% 28.41% 13.41% 12.41% 11.46% 10.55% 9.69% 8.86% 8.08% 7.32% 6.60% 5.90% 5.23% 4.59%
17.51% 16.47% 15.48% 14.54% 13.65% 12.80% 11.98% 11.20% 10.45% 9.72% 9.03% 8.36%
21.10% 20.03% 19.01% 18.05% 17.12% 16.24% 15.40% 14.60% 13.82% 13.08% 12.36% 11.67%
24.31% 23.21% 22.17% 21.18% 20.23% 19.33% 18.46% 17.63% 16.84% 16.08% 15.34% 14.64%
27.22% 26.10% 25.03% 24.01% 23.04% 22.12% 21.24% 20.39% 19.58% 18.79% 18.04% 17.32%
step 2.00%
Leverage Sensitivity - Assuming Exit in Year 5 Total Debt / EBITDA
33.94%
0.21 6.00% 8.00%
Hurdle Rate 20.0%
Premium Paid
12.00% 14.00% 16.00% 18.00% 20.00% 22.00% 24.00% 26.00% 28.00% 30.00% 32.00% 34.00% 36.00% 38.00% 40.00% 42.00% step 2.00%
3.5 22.76% 21.82% 10.00% 20.07% 19.25% 18.46% 17.70% 16.97% 16.26% 15.58% 14.93% 14.29% 13.68% 13.08% 12.51% 11.95% 11.40% 10.87% 10.36%
4.5 25.96% 24.75% 20.93% 22.54% 21.51% 20.54% 19.60% 18.72% 17.87% 17.05% 16.27% 15.52% 14.79% 14.09% 13.42% 12.77% 12.14% 11.54% 10.95%
5.5 30.73% 29.05% 23.61% 26.05% 24.70% 23.43% 22.23% 21.10% 20.03% 19.01% 18.05% 17.12% 16.24% 15.40% 14.60% 13.82% 13.08% 12.36% 11.67%
6.5 38.90% 36.21% 27.50% 31.64% 29.66% 27.85% 26.18% 24.64% 23.20% 21.85% 20.59% 19.41% 18.29% 17.23% 16.22% 15.27% 14.36% 13.49% 12.66%
7.5 57.68% 51.41% 33.81% 42.22% 38.68% 35.61% 32.91% 30.50% 28.33% 26.36% 24.56% 22.90% 21.37% 19.94% 18.61% 17.37% 16.20% 15.09% 14.05%
46.38%
Percent Err:522 Err:522 12.29% 24.57% 3.39% 36.25% Err:522
Points 1.50% 2.00% 3.25%
5.4) 7.3) 23.6) $36.3
Fees
Leverage Assumptions
$50.0 Minimum Cash Level 5.5 Total Debt / EBITDA 25.00% Revolver % 25.00% Term Loan B % 50.00% Sr. Sub. Notes % Interest Rate Assumptions
Percent 350 bps Revolver Spread 450 bps Term Loan B Spread 10.00% Sr. Sub. Debt Rate 3.00% LIBOR
Err:522 Err:522 1.23% 1.00% Err:522
Year1 17.51% 17.12% 21.10% 19.88% 24.31% 22.36% 1.6 5.6 4.5
Year4 1.6 6.4 5.2
Year4 $803.7 $986.5 10 100. 0.00 00% % 10 100. 0.00 00% % 0.00% 0.00%
$2,856.4 1,533.9) $1,3 $1,322 22.5 .5 882.6) $439.9 87.0) $352.9 78.7) $274.1 109.7)
Year5 16.63% 16.09% 18.83% 17.89% 20.81% 19.52%
1.5 7.2 5.8
$372.5 72.3) $300.2 120.1)
Year5 1.4 8.4 6.8
Year5 $1,182.9 $1,392.8 10 100. 0.00 00% % 10 100. 0.00 00% % 0.00% 0.00%
Year4 $3,013.5 $3,164.2 1,618.2) 1,699.2) $1,3 $1,395 95.2 .2 $1,4 $1,465 65.0 .0 931.2) 977.7) $464.1 $487.3 91.6) 94.7) $392.6 67.3) $325.4 130.1)
#
Year5 $3,306.6 1,775.6) $1,5 $1,530 30.9 .9 1,021.7) $509.2 95.9) $413.3 60.3) $353.0 141.2)
Year7
Year6
#
Year8
Year7
Year7
Year6
Year8
Year8
Year7
Year9
Year9
Year8
Year9
$164.5
$180.1
$195.2
$211.8
6.0% 46.3% 30.90% 2.9% 40.0%
5.5% 46.3% 30.90% 2.9% 40.0%
5.0% 46.3% 30.90% 2.9% 40.0%
4.5% 46.3% 30.90% 2.9% 40.0%
step -0.50% 0.00% 0.00% 0.00% 0.00%
Year4
Year5
355.5) 65.7) $421.2
375.1) 69.3) $444.4
393.8) 72.8) $466.6
411.6) 76.1) $487.6
243.7) 205.7) $449.4
257.1) 217.0) $474.1
270.0) 227.8) $497.8
282.2) 238.1) $520.2
$28.2
$29.7
$31.2
$32.6
84.6) 2.30% 58.0) 7.20%
84.6) 2.30% 58.0) 7.20%
84.6) 2.30% 58.0) 7.20%
84.6) 2.30% 58.0) 7.20%
Year6
Year7
Year8
Year9
step
0.00% 0.00%
Year4 $164.5 $180.1 87.0) 91.6) 1.6) 1.5) 85.7) 90.4) $167.4 $182.8
3.00%
3.00%
Year5 $195.2 $211.8 94.7) 95.9) 1.5) 1.4) 94.9) 99.2) $196.4 $209.9
3.00%
3.00%
#
Year7
Year8
Year9
Year7
Year8
Year9
step 0.00%
Year4 $167.4 $182.8 89.1) $78.3 $182.8 4.05%
4.20%
Year5 $196.4 $209.9 $196.4 $209.9 4.35%
4.50%
#
step 0.15%
-
-
-
-
7.55% -
7.70% -
7.85% -
8.00% -
89.1) 89.1) -
-
-
-
44.6) 8.55% $3.8
8.70% -
8.85% -
9.00% -
725.4) $725.4
725.4) $725.4
725.4) $725.4
725.4) $725.4
725.4) 10.00% $72.5
725.4) 10.00% $72.5
725.4) 10.00% $72.5
725.4) 10.00% $72.5
50.0) 78.3) $128.3
128.3) 182.8) $311.1
311.1) 196.4) $507.6
507.6) 209.9) $717.5
89.1)
219.7)
409.3)
612.5)
2.00% 1.8)
2.00% 4.4)
2.00% 8.2)
2.00% 12.3)
3.8) 72.5) 4.2) 1.8) $78.7
72.5) 4.2) 4.4) $72.3
72.5) 2.9) 8.2) $67.3
72.5) 12.3) $60.3
11.24)
7.07)
2.90)
-
4.17) $7.1
4.17) $2.9
Year4
2.90) -
-
Year5
#
$439.9
$464.1
$487.3
$509.2
$3,738.0 $4,177.8 $4,617.7
$3,943.5 $4,407.6 $4,871.7
$4,140.7 $4,628.0 $5,115.3
$4,327.1 $4,836.3 $5,345.5
725.4) 128.3)
725.4) 311.1)
725.4) 507.6)
725.4) 717.5)
$3,140.9 $3,580.8 $4,020.7
$3,529.3 $3,993.4 $4,457.5
$3,922.9 $4,410.2 $4,897.5
$4,319.2 $4,828.4 $5,337.6
16.63%
16.09%
15.53%
14.97%
18.83% 20.81%
17.89% 19.52%
17.04% 18.41%
16.26% 17.43%
step 1.0
step
Year7
Year8
Year9
1.0
Year10
Year10
Year10
Year10
Year10
Year10
Year10
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