# Port Alder | finish the one-hour model, then review credit

1. Time the exercise from receipt. Share the screen for the live version. Return Port Alder - Candidate.xlsx at the one-hour cutoff, including an incomplete attempt. Include the three short responses.
2. In Port Alder - Solved.xlsx on Model Exercise!D18:E27, separate $112.74m seller consideration from the $12m debt refinance. Uses of $126.74m less $63m new debt require $63.74m sponsor cash. Use working-capital days and charge interest on beginning senior and subordinated balances.
3. Model Exercise rows 48:65 pay the senior first. Year one free cash of $6.846m reduces senior debt. In year five, after retiring the remaining $11.826m senior balance, only $0.635m is left to pay the subordinated loan. Ending subordinated principal is $15.365m.
4. Model Exercise!P74:P77 and K79:K80 returns $168.134m, 2.638x and 21.41%. Answer how the buyer can improve returns, how earnings become cash, and whether the return clears a stated hurdle.
5. After the timer, open Model Exercise!L67:P68. Net debt / EBITDA falls from 3.43x to 0.69x and EBIT / cash interest rises from 3.05x to 8.10x. The center cells N88 and N97 reproduce 21.41% and 2.638x. Dropping exit from 8.25x to 7.25x at the same entry price gives 18.01%. Year three yields 23.16% but only 1.87x. A shorter hold raises annualized return without necessarily increasing total profit.

Recognize an unfunded exit
Model Exercise!L48:P52 carries cash left after debt service. Preserve historical receivable days at K38; changing the first forecast year to 43 days cuts senior repayment at L57 to $5.147m. A 12% sales decline in each forecast year uses $7.573m in FY2030 and leaves $14.066m cumulatively unfunded. Negative cash is a financing gap. Under the supplied debt structure the return is N/M until an equity injection or other funding is specified. A funded exit with no value left for common equity instead earns 0.00x and a total loss.
5. In the timed-layout reference, repair the two blue cells in Model Exercise!I118:K129 after the cutoff. Cash tax comes from tax expense. An inventory increase uses cash. Verify $7,332.65 thousand after the tax correction and $6,846.09 thousand after both corrections. At zero or negative sponsor equity, or an unfunded interim gap, both return measures are N/M.