Hedging FX risk in a cross-border merger
A global payments processing company minimized its exposure to floating interest rates within its term loan and revolver, while maintaining flexibility for future acquisitions, principal paydowns, and other events that could change its capital structure.
Company goals
- Mitigate FX risk from sign to close, with the flexibility to account for deal close uncertainty
- Execute as efficiently as possible despite the large notional needed to be traded at once
- Evaluate combined risk profile for economic and accounting impacts on key metrics
Results
- Shed light on the opaque deal-contingent market and met protection and flexibility goals
- Mitigated banks’ ability to front run the market given the size of the transaction
- Quantified global financial risk in order to prioritize risk mitigation measures
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Disclaimers
Chatham Hedging Advisors, LLC (CHA) is a subsidiary of Chatham Financial Corp. and provides hedge advisory, accounting and execution services related to swap transactions in the United States. CHA is registered with the Commodity Futures Trading Commission (CFTC) as a commodity trading advisor and is a member of the National Futures Association (NFA); however, neither the CFTC nor the NFA have passed upon the merits of participating in any advisory services offered by CHA. For further information, please visit chathamfinancial.com/legal-notices.
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