The Credit Investor's Handbook

Disclaimer xi Foreword xiii Acknowledgments xv About the Author xxi About the Editor xxiii Preface: My Story xxv Introduction: Structure of the Book xxxi Part One Building Blocks of the Leveraged Credit Markets 1 Chapter 1 Description and History of the Leveraged Finance Markets 3 Chapter 2 Credit Cycles 13 Chapter 3 A Primer on Leveraged Credit Trading Terminology 29 Chapter 4 A Primer on Leveraged Buyouts (LBOs) 39 Part Two The Seven- Step Process of Evaluating a Debt Investment 49 Chapter 5 Step 1 of the Credit Analysis Process: Sources and Uses 51 Chapter 6 Step 2 of the Credit Analysis Process: Qualitative Analysis 57 Chapter 7 Step 3(a) of the Credit Analysis Process: Financial Statement Analysis-- Profitability 75 Chapter 8 Step 3(b) of the Credit Analysis Process: Financial Statement Analysis--Cash Flow and Liquidity 103 Chapter 9 Step 3(c) of the Credit Analysis Process: Financial Statement Analysis-- Capital Structure 121 Chapter 10 Step 4 of the Credit Analysis Process: Forecasting 147 Chapter 11 Step 5 of the Credit Analysis Process: Corporate Valuation 171 Chapter 12 Step 6 of the Credit Analysis Process: Structuring and Documentation 189 Chapter 13 Step 7 of the Credit Analysis Process: Preparing an Investment Recommendation and Credit Committee Memo 203 Part Three Distressed Debt Investing 265 Chapter 14 Introduction to Distressed Debt Investing 267 Chapter 15 Bankruptcy 101 271 Chapter 16 Bankruptcy Fights 283 Chapter 17 How Subordination Works in Bankruptcy 301 Chapter 18 Liability Management and Creditor- on- Creditor Violence 317 Chapter 19 Making Money in Distressed Situations 329 Closing Comment Chapter 20 My Closing Comment 365 Appendix Appendix The Quinn Case Study 369 Index 375

MICHAEL A. GATTO has twenty-five years of investing experience in the debt markets at Silver Point Capital(a $20+ billion credit-focused investment management firm) and Goldman Sachs' Special Situations Group. Furthermore, he is an adjunct professor at Columbia Business School and Fordham University's Gabelli School of Business. Michael brings all these experiences together, along with highly complex case studies, to define and teach the skills to succeed in the dynamic and complex credit markets. This comprehensive manual combines decades of Michael's firsthand war stories, often infused with humor, with reflections from leading industry professionals, making the book accessible, readable, and entertaining.