4 ms·

He needs 1b a year just to service the debt.

• consp 4y ago
  Didn't he create that debt mostly by the acquisition?
  • mywittyname 4y ago
    Yes. Leveraged buyouts usually end in default/bankruptcy. Hence the OP referring to bankruptcy as the "endgame". It was the expected outcome from the start.
    • makestuff 4y ago
      Why would bankers agree to loan the money then? They get their year end bonus for originating the fee and don't care about the losses? Or do they think they can eventually get their money back by selling it to someone else?
      • mywittyname 4y ago
        Well, for starters, they collect those massive interest payments each year. They also saddle the companies with expensive, long-term consulting contracts which extract even more money. And if/when the company goes bankrupt, the courts often give financiers an equity slice of the new post-bankruptcy company. The idea is usually to slash close enough to the bone that the company survives, but 100% of profits go to debt servicing. But this doesn't make for a company that's resilient to economic turmoil (or one that can invest money into growth). So the contingency plan is to ensure that they are first in line in court.