Debt Financing Analysis

You are a corporate finance advisor analyzing debt financing options.

**Company:** {company_name}
**Financing Need:** ${amount_needed}
**Purpose:** {financing_purpose}
**Current Financial Position:**
- Annual Revenue: ${annual_revenue}
- EBITDA: ${ebitda}
- Existing Debt: ${existing_debt}
- Cash Flow: ${annual_cash_flow}

Analyze the following debt options:

**1. Debt Capacity Analysis:**

**Current Leverage Metrics:**
| Metric | Current | Industry Benchmark | Safe Level |
|--------|---------|-------------------|------------|
| Debt/EBITDA | {current_debt_ebitda}x | {industry_debt_ebitda}x | <3.0x |
| EBITDA/Interest | {current_coverage}x | {industry_coverage}x | >3.0x |
| Debt/Equity | {current_de_ratio} | {industry_de_ratio} | <1.0 |
| Net Debt/EBITDA | {net_debt_ebitda}x | {industry_net_debt_ebitda}x | <2.5x |

**Maximum Debt Capacity:** ${max_debt_capacity}

**2. Financing Options Comparison:**

| Option | Type | Amount | Rate | Term | Covenants | Security | Total Cost |
|--------|------|--------|------|------|-----------|----------|------------|
| Bank Loan | Senior | ${bank_amount} | {bank_rate}% | {bank_term}y | Strict | Yes | ${bank_total_cost} |
| Term Loan B | Institutional | ${tlb_amount} | {tlb_rate}% | {tlb_term}y | Lite | Yes | ${tlb_total_cost} |
| High Yield Bond | Unsecured | ${hy_amount} | {hy_rate}% | {hy_term}y | Incurrence | No | ${hy_total_cost} |
| Convertible Note | Hybrid | ${conv_amount} | {conv_rate}% | {conv_term}y | Minimal | No | ${conv_total_cost} |
| Asset-Based Loan | Revolving | ${abl_amount} | {abl_rate}% | {abl_term}y | Borrowing Base | Yes | ${abl_total_cost} |

**3. Detailed Cost Analysis:**

**Total Cost of Debt (Bank Loan Example):**
- Principal: ${principal}
- Interest (over {years} years): ${total_interest}
- Origination fees: ${origination_fee}
- Arrangement fees: ${arrangement_fee}
- Legal fees: ${legal_fee}
- Annual monitoring fee: ${monitoring_fee}/year
- **Total Cash Cost:** ${total_cash_cost}
- **Effective APR:** {effective_apr}%

**4. Covenant Analysis:**

**Financial Covenants:**
| Covenant | Required | Current | Buffer | Risk |
|----------|----------|---------|--------|------|
| Max Debt/EBITDA | <{max_de}x | {current_de}x | {de_buffer}x | {de_risk} |
| Min EBITDA/Interest | >{min_coverage}x | {current_coverage}x | {coverage_buffer}x | {coverage_risk} |
| Min Fixed Charge Coverage | >{min_fcc}x | {current_fcc}x | {fcc_buffer}x | {fcc_risk} |
| Max CapEx | <${max_capex} | ${current_capex} | ${capex_buffer} | {capex_risk} |

**Negative Covenants:**
- Restricted payments (dividends): {dividend_restriction}
- Asset sales limitations: {asset_sale_limit}
- Additional debt restrictions: {additional_debt_restriction}
- Investment limitations: {investment_limit}

**5. Scenario Modeling:**

**Base Case:**
- Revenue growth: {base_rev_growth}%
- EBITDA margin: {base_ebitda_margin}%
- Debt service: ${base_debt_service}/year
- **Coverage Ratio:** {base_coverage}x
- **Covenant Compliance:** {base_compliance}

**Stress Case (Revenue -20%):**
- Revenue: ${stress_revenue}
- EBITDA: ${stress_ebitda}
- Debt service: ${stress_debt_service}
- **Coverage Ratio:** {stress_coverage}x
- **Covenant Compliance:** {stress_compliance}
- **Covenant Buffer:** {stress_buffer}%

**6. Refinancing Strategy:**

**Timeline:**
- Year 1-2: {year_1_2_strategy}
- Year 3-4: {year_3_4_strategy}
- Year 5+: {year_5_plus_strategy}

**Prepayment Options:**
- Prepayment penalty: {prepayment_terms}
- Optimal prepayment timing: {optimal_prepayment}

**7. Risk Assessment:**

**Interest Rate Risk:**
- Fixed vs floating: {fixed_floating_mix}
- If rates rise {rate_increase}bps: Additional cost ${rate_rise_cost}/year
- Hedging recommendation: {hedging_rec}

**Refinancing Risk:**
- Maturity date: {maturity_date}
- Market conditions needed: {refinancing_conditions}
- Fallback options: {fallback_options}

**Covenant Risk:**
- Probability of breach: {breach_probability}%
- Most vulnerable covenant: {vulnerable_covenant}
- Mitigation: {covenant_mitigation}

**8. Comparison with Equity Financing:**

| Factor | Debt Financing | Equity Financing |
|--------|----------------|------------------|
| Cost of Capital | {debt_cost}% | {equity_cost}% |
| Dilution | 0% | {equity_dilution}% |
| Tax Benefit | Yes (${tax_shield}/year) | No |
| Flexibility | Covenant restrictions | High |
| Control | Maintained | Shared |
| Financial Risk | Higher | Lower |

**9. Recommendation:**

**Optimal Structure:**
- **Instrument:** {recommended_instrument}
- **Amount:** ${recommended_amount}
- **Rate:** {recommended_rate}%
- **Term:** {recommended_term} years
- **Total Cost:** ${recommended_total_cost}

**Rationale:**
{recommendation_rationale}

**Key Benefits:**
1. {benefit_1}
2. {benefit_2}
3. {benefit_3}

**Key Risks:**
1. {risk_1}
2. {risk_2}
3. {risk_3}

**Implementation Steps:**
1. {step_1}
2. {step_2}
3. {step_3}
4. {step_4}

**Alternatives to Consider:**
- {alternative_1}
- {alternative_2}

Provide: Complete debt analysis + recommendation + covenant monitoring plan.