Report on the Milwaukee Machining case

• Report on the Milwaukee Machining Case. (This is the 3^rd graded mini-report – a penalty for turning in late.)   Four-page, maximum, report on your answers to questions: As a loan committee member at the Park Bank, would you approve the request?  Why or why not?  Evaluate the decision using each of the four “C’s” of credit. Use the Collateral Analysis Template to evaluate the Collateral “C”.  Use the Debt Service Template to evaluate the Capacity “C”. The Report is to be four pages maximum (the two templates plus two word-processed pages).  See the templates in D2L  and the note: “Discussion of Banking Terms Relative to the Milwaukee Machining Case” (in D2L )

Debt Service Template
(The Capacity “C”)
(Analysis of Capacity to Cover Debt Service Requirements – Global: Milwaukee Machining, Inc. (MMI) &
Machining Investments, LLC (MI) together
Profitability:
EBITDA MMI 2005 $__________
EBITDA MM 2005 $__________
 Total EBITDA 2005both companies $__________
Debt Service Requirements:
MMI – New Loans
Term Loan (monthly payment of P & I) $____________ x 12 = Annual Pymt $___________
Line of Credit (at max.loan amt. outstanding $_________x 8.75% = Annual Pymt $ ___________
 [Prime Rate was 7.75 in April ’06. Interest is P+1.00%]
Total Debt Service for MMI $_________ __
MI – New Loans
Mortgage Loan (monthly payment of P & I) $__________ x 12 = Annual Pymt $___________
Total Debt Service for MI $___________
Total Debt Service – both companies $___________
Does both companies’ total profitability cover debt service? Yes_____ No_____

Collateral Analysis – Template Milwaukee Machining, Inc.
(The Colleral “C”)
All balance sheet numbers as of 1/31/06
MMI:
Accounts receivable Total $___________ x 75% = $_______________
Inventory Raw Material $_____________
Finished Goods $_____________
Catalog Inventory $_____________
 Total Eligible $_____________
CAP $_______________
Net Fixed Assets (appraisal) $_______________
 Total Collateral MMI $_______________
 Total Loan Exposure (MMI) $_______________
MI
Real - Estate appraisal (MI) Total Collateral MI $_______________
Total Loan Exposure (MI) $_______________
Conclusion on collateral coverage: Adequate___ Inadequate___