Competition placement
The problem
The case company faced a $20B data center investment while operating close to its leverage covenant. The new facility offered substantial future earnings, but the company needed to fund construction before those earnings began.
What I compared
I modeled two financing structures: issuing $20B of debt or bringing in an infrastructure partner that funded the investment in exchange for 49% of the project’s EBITDA for 20 years.
Why timing changed the answer
In the case model, debt financing pushed net debt to EBITDA to 4.5× against a 4.0× covenant before the project generated revenue. The partnership kept leverage at or below 3.69× over the five-year projection period.
The recommendation
I recommended the partnership. It gave up a share of future earnings but preserved borrowing capacity and avoided the modeled covenant breach. I also proposed staged buyback options to help the company recover more of the upside if the asset outperformed expectations.
The result
The submission placed third among more than 160 competition participants. The financing recommendation and projected ratios belong to the hypothetical case; they are not outcomes from a completed transaction.