(Private Placement: Cash Deal Financed by Sponsor’s Equity and Debt, Structured as a Stock Sale)
Calpine Corp. Financial Model is a financial model of a North American independent power producer private placement by a consortium of investors including Energy Capital Partners, Access Industries and CPPIB. The company has been struggling for two years prior to the take private given the shifting dynamic of renewable energy industry with share prices declining by 60%. The deal is a cash deal financed by mostly sponsor’s equity as well as debt, and structured as a stock sale. The model is ideal for investment banking, equity research, power and utility and private equity finance professionals, valuation and transaction experts. The model includes the following features:
- A quarterly 3-statement financial model of this independent power producer under the existing management and the private equity team including: a detailed power industry revenue schedule, power industry cost schedule, depreciation schedule, working capital schedule, tax schedule, debt and interest schedule, shareholder’s equity schedule, covenants and credit statistics, income statement, cash flow statement and balance sheet for an eight year forecast period.
- Internal rate of return (“IRR”) schedule, cash on cash return and value added at the operating company (“OPCO”) and the holding company (“HOLDCO”) levels given the initial investment in OPCO and HOLDCO by the sponsors in Q2/2017, the assumptions made with respect to the OPCO dividends and its use, HOLDCO debt payments, calculation of paid-in-kind and cash interest expense and its treatment in HOLDCO debt schedule, and quarterly exit throughout 2023 to 2025.
- Leveraged buyout model along with the sources and uses of funds at OPCO and HOLDCO given the stock sale financed on balance sheet mostly with sponsor equity, long term debt, asset backed revolver, and bridge loan while assuming the existing long term debt on balance sheet as of June 30, 2017 (end of 2017 second quarter date), transaction fees and purchase price allocation, and calculation of goodwill created on the pro forma balance sheet in the transaction given the deal tearsheet and financial disclosures.
- Recapitalized pro forma balance sheet of the company that is taken private.
- Historical financial statements of Calpine and the resulting credit statistics from 2016 Q4 to 2018 Q3.
- Three different methods and schedules for calculation of unlevered free cash flow (“Free Cash Flow to the Firm”,”FCFF”, or “UFCF”).
- Valuation of the revamped company under the guidance of the management and private equity team, based on intrinsic value approach.
- Implied share price as well as value of control per share under the management team and the private equity firms as a result of their efforts to improve operating efficiency and capital structure.
- Quantification of risk measures for purposes of valuation including beta calculation, cost of equity and cost of capital calculation throughout the forecast period given the changing leverage of the company as debt is paid down.
- Calculation of basic and diluted shares outstanding given the offer price.
- Sensitivity analysis of the intrinsic valuation of the revamped company with respect to term year weighted average cost of capital and term year growth rate.
- Scenario analysis for Base, Best and Worst Case inflation, term growth and electricity and natural gas prices and the resultant three statement financial model, implied valuation, and exit IRRs of OPCO and HOLDCO.
- An automated summary dashboard for Base, Best and Worst Case of revamped company financial report, market data, transaction and IRR schedules for all investors.
- The tabs of the models are: Cover, Summary, Assumptions, Sources and Uses, Scenarios, Historicals, Model, Valuation, WACC, Shares and Notes.
- A report of the transaction and the financial model describing different steps and segments of the model, the transaction terms and company valuation, IRRs and sensitivities as of June 30, 2017, anatomy of a leveraged buyout (“LBO”) and criterias which make a successful private placement target along with the print ready format of the model is included with the package.
Calpine Corp. Financial Model
- This financial model is a circular, 3-statement model along with a comprehensive leverage buyout model with many other features explained in the product description. Please ensure prior to opening the excel sheet, iterative calculations within the excel workbook environment has been enabled under: File/Options/Formulas/Enable iterative calculations.
- Set the Calculation options under File/Options/Formulas to ‘Automatic except data tables’. In case of the existence of data tables in the models, press F9 to refresh and update the table calculations.
- The workbook contains a Macro in the form of the product Disclaimer which should be accepted by the user; hence, please enable macros in the workbook. The financial model itself contains no macros.
- Please ensure the above steps are implemented prior to opening the excel sheet.
- If at any point #Value! appears in the Model and the results, toggle the circularity switch on the Assumptions tab to ON and then OFF to address the problem. This switch sets all interest expenses to zero when turned ON.
- If any changes are applied to the assumption inputs in the model, toggle through the Scenario Switch on the Assumptions tab to Base, Best and Worst Case so that the Summary tab results are updated.
- All blue font in the model are hardcoded inputs, black font is calculation, red font is the references to the blue inputs on the Assumptions tabs, and any orange cells are values sourced from Refinitiv.