Question

Bank of America proposal Deutsche Bank proposal Principal $0.5 billion $0.5 billion Maturity 5 years 5 years Reset period LIBOR + 0.25% LIBOR + 0.375% Interest rate every six months every six months Syndication fee 1.125% 0.75% Questions 1. What are the net proceeds to Siemens from each of these syndicated loan proposals?

Answer 1

Computation of Net Proceeds from Bank of America

Principal amount = $ 0.5 Billion or $ 500 Millions

Syndication fees = 1.125%

Syndication fees amount = Loan amount * 1.125%

= $ 500 Million *1.125%

= $ 5.625 Million

Net proceeds from Bank of America = Loan amount - Syndication fees amount

= $ 500 Million - $ 5.625 Million

= $ 494.375 Million

Hence Net Proceeds from Bank of America is $ 494.375 Million

Computation of Net Proceeds from Deutsche Bank

Principal amount = $ 0.5 Billion or $ 500 Millions

Syndication fees = 0.75%

Syndication fees amount = Loan amount * 0.75%

= $ 500 Million *0.75%

=$ 3.75 Million

Net proceeds from Deutsche Bank = Loan amount - Syndication fees amount

= $ 500Million-$ 3.75 Million

= $ 496.25 Million

Hence Net Proceeds from Deutsche Bank is $ 496.25 Million.

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