Debt Balance Projections

Our second step in constructing the debt schedule involves projecting debt and preferred stock balances. Some instruments are subject to mandatory repayment (i.e. scheduled maturity), while others are not, as described in our last step. Preferred stock retirement is a type of optional repayment, which we assume does not happen in the absence of a specific catalyst for redeeming the preferred. We have tailored the terminology used to describe mandatory and optional repayment to suit each type of debt and preferred instrument, but these terms are synonymous (e.g. “mandatory repayment” is conceptually no different from “scheduled maturity”).

Note that we have assumed the bank revolver commitment is $100mm, but this is a just guess. We probably would not know the actual bank commitment without further diligence.

Finally, we link the debt schedule to the balance sheet. Our balance sheet now balances!