Think about it
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This is a cash on cash play. The PE owns the company but put up very little (relatively speaking) cash. The banks hold $16B in debt. The combined entity still generates > $1B in cash, today, which is enough to pay the interest. And with layoffs etc, the cash flow will improve, even if revenues are challenged.
So, the issues is not paying the debt, its about breaking Citrix apart and selling it off in pieces so that they can get back $18-22B for the sum. If they do, they pay back $16B for the debt, and make $4-6B in profit for their $1-2B in investment. That's a fantastic return.
Watch, this is going to be a great deal for PE in 5 years, as long as the whole economy does not tank. For employees that remain, it will be good too.. They will be paid well. Its the ones that don't remain that are getting the short-end of the stick.
Yes, I wasn't thinking that Vista doesn't know how to make a profit. One thing that made the deal more complicated is that interest rates soared this year. I'm sure they will come out on top.
In Vista and Elliot we trust.
Revenues are over $3 billion a year, with large margins. With private ownership cash flow is king, not accounting P&L.
You can tell that many posters here - or at least a few who post a lot - don't understand much about the business side of running a business. Do you really think that Vista and Elliott and the banks decided they wanted to burn $16 billion and buying and destroying Citrix was the best way to do it?
So the deal that took citrix private on the surface makes zero financial sense. Obviously CSG is headed toward bankruptcy, and somehow that is part of the plan.
At 6.5 interest rate this is one billion $ to pay each year just for the interests
And little hope of finding a buyer for this collection of damaged goods known as CSG