CAPITAL STACK ISSUE #5

Hello,

Welcome to this weeks edition of the CAPITAL STACK Newsletter.

The Framework

Sources and Uses and the one minute leverage check

A Sources and Uses schedule is the simplest way to sanity check a transaction. It forces you to reconcile what you are buying and paying out (Uses) with how you are funding it (Sources). If the totals do not match, the deal model is wrong before you even debate assumptions.

It also helps you separate a good asset from a fragile capital stack. Once Sources and Uses are clear, you can do a quick pro forma leverage check to see how much balance sheet pressure the deal creates relative to EBITDA. That is often the first constraint that matters in practice.

Worked example (generic numbers)

Assume an acquisition with these terms:

Uses

• Purchase equity value: $500m
• Refinance target net debt: $40m
• Fees: $10m
  Total Uses: $550m

Sources

• New term loan: $330m
• New equity: $200m
• Seller rollover equity: $20m
  Total Sources: $550m

Now do the one minute leverage check:

1. Net Debt (pro forma)

• Assume closing cash is $30m
• Net Debt = $330m debt minus $30m cash = $300m

1. Net leverage

• Assume EBITDA is $70m
• Net leverage = $300m divided by $70m = 4.3x

If you want a clean reference example of the calculation mechanics, Wall Street Prep has a straightforward worked example of net debt to EBITDA.
For the Sources and Uses concept overview, Corporate Finance Institute provides a clear primer.

This Week in Deals

Nine acquires QMS Media and reshapes the portfolio

Type: M&A / Strategic Acquisition
Value: A$850m enterprise value
Who: Nine Entertainment Co. acquiring QMS Media from Quadrant Private Equity
Why it matters: Funding a cash generative asset from existing facilities only works if synergy delivery is fast enough to keep leverage contained.
Date of announcement: 30 January 2026

Challenger and Pepper Group table a Pepper Money privatisation proposal

Type: M&A / Take Private (Indicative)
Value: A$2.60 per share (less final and any special dividends)
Who: Challenger Limited and Pepper Group proposing to acquire Pepper Money Limited via scheme
Why it matters: Non bank lenders live and die on funding spreads, a take private only clears if cost of capital falls faster than origination margins.
Date of announcement: 9 February 2026

Caterpillar progresses its RPMGlobal scheme with FIRB clearance

Type: M&A / Scheme of Arrangement (Regulatory Milestone)
Value: Not disclosed in this update
Who: Caterpillar Inc. bid vehicle acquiring RPMGlobal Holdings Limited
Why it matters: Regulatory conditions are often the critical path, once cleared the remaining risk is execution timing and shareholder process discipline.
Date of announcement: 22 January 2026

Apiam scheme becomes legally effective

Type: Private Equity / Scheme of Arrangement (Process Step)
Value: Not disclosed in this release
Who: Apiam Animal Health Limited being acquired by entities controlled by Adamantem Capital
Why it matters: Once effective, timing and conditions convert into a short dated settlement problem, cash and dividend mechanics become the binding constraints.
Date of announcement: 6 February 2026

Apiam declares a 10 cent special dividend linked to the scheme

Type: Capital Management / Transaction Linked Distribution
Value: A$0.10 per share special dividend
Who: Apiam Animal Health Limited
Why it matters: Special dividends can shift value between price and payout, investors must track record dates to avoid mispricing effective consideration.
Date of announcement: 5 February 2026

Pinnacle moves to full control of Pacific Asset Management

Type: Private Equity / Platform Consolidation (Asset Management)
Value: Approximately A$418.8m total consideration
Who: Pinnacle Investment Management Group Limited acquiring remaining interest in Pacific Asset Management LLP
Why it matters: Cash plus scrip deals test alignment, sellers accept equity only if they believe the platform multiple will expand or earnings will compound.
Date of announcement: 3 February 2026

Maas sells Construction Materials to Heidelberg and pivots capital
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​Type: M&A / Divestment
Value: Up to A$1.7b
Who: Maas Group Holdings Limited selling to Heidelberg Materials Australian arm (HMA)
Why it matters: Selling the cash engine changes the underwriting, the market will mark to certainty of redeployment returns rather than historical earnings stability.
Date of announcement: 4 February 2026

Ramsay gets ACCC approval to buy National Capital Private Hospital assets

Type: M&A / Distressed Asset Purchase (Approval)
Value: Not disclosed
Who: Ramsay Health Care acquiring assets from Healthscope receivers
Why it matters: In distressed sales, price is rarely the edge, regulatory clearance and transfer execution determine whether the asset becomes accretive quickly.
Date of announcement: 13 February 2026

Firmus secures a very large private credit package for AI infrastructure

Type: Private Credit / Structured Debt Financing
Value: US$10b debt financing
Who: Firmus Technologies with lenders including Blackstone and Coatue Management
Why it matters: Large scale private credit is now underwriting infrastructure style cashflows, it resets what is fundable before equity and IPO windows reopen.
Date of announcement: 9 February 2026

Splose raises growth capital for physio clinic software

Type: VC / Growth Round
Value: A$46m
Who: Splose raising from growth investors (per AFR report)
Why it matters: Vertical SaaS with workflow lock in can compound efficiently, the test is whether CAC payback holds when expansion moves beyond the core niche.
Date of announcement: 11 February 2026

Capital Stack's View

Firmus and the MAAS Group Shift from Quarries to Compute

Maas Group Holdings has agreed to divest its Construction Materials division to Heidelberg Materials for cash proceeds of up to A$1.703b, including A$120.0m contingent consideration, with completion expected in the second half of 2026 (subject to approvals). In the same disclosure, Maas flagged an A$100m strategic minority equity investment for an approximately 1.7% interest in Firmus. Days later, Firmus announced a US$10b debt financing facility led by Blackstone and Coatue Management to fund Project Southgate, targeting up to 1.6GW of capacity over the next three years.

Heidelberg described the transaction as A$1.7b Enterprise Value, implying an 8.4x EBITDA multiple after synergies, with the package including headlines such as; 40 quarries with 350m tonnes of reserves; and downstream concrete and asphalt capacity. The real asset here is the reserves and the proximity with the synergies coming from optimising an existing footprint from what Maas had built rather than investing new demand.
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The mechanism is a classic capital rotation, but the binding constraint is new. Construction materials are heavy, cyclical cashflows with local market power; AI data centre infrastructure is heavy, long lead time capex where power access and connection timing set the ceiling on delivery. Australian Energy Market Operator cites estimated Australian data centre electricity consumption of 3.9TWh in FY25 and forecasts 12.0TWh by FY30 under its Step Change scenario, which is a structural step up in load. On the network side, Australian Energy Regulator materials show utilities are explicitly modelling data centre connection capex and assume 85% of connection expenditure is funded by the proponent, reinforcing that delivery is as much a financing and permissions exercise as it is engineering.
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The practical read is that Maas is swapping a known earnings engine for an option on AI infrastructure, while trying to cap downside by staying minority on equity and letting debt set the rollout pace. The tension is that lenders and equity are underwriting different risks: debt needs predictable construction controls, power certainty and a credible ramp in utilisation, while minority equity is buying long duration upside. Reuters also noted investor nerves around the pivot, including that the divested unit represented about half of Maas’ core operating earnings in FY25 and the stock reaction highlighted how quickly markets punish uncertainty in the bridge period. Their share price plummeted on the announcement down to $4.06 per share as the intra day low, from the previous day close price of $5.60, a roughly 27% drop in value. The lesson: in AI infrastructure, theme strength is not enough, you must underwrite the constraint set, especially power, connection, and the timing gap between funding and cash generation. AFR​

Capital Transitions

Selected recent insolvency and capital transition signals that may intersect with deal flow or special situations:
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​Barbeques Galore External Administration Appointment (ASIC Notice)

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Industry: Retail
Appointment: External Administrator Appointment
Why it matters: Administration events can become structured sale processes; the “who controls the process” question determines outcomes for lenders and buyers.
Date of appointment or announcement: 12 February 2026

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​Heureka Investments External Administration Appointment (ASIC Notice)
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​Industry: (as per ASIC notice)
Appointment: External Administrator Appointment
Why it matters: Early appointments often precede asset rationalisation, recapitalisation, or a “clean sale” via administrator-led process.
Date of appointment or announcement: 05 February 2026
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​Ramsay to Acquire National Capital Private Hospital From Healthscope Receivers
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​Industry: Healthcare
Appointment: Receivers and Managers (Healthscope Group entities)
Why it matters: Receiver-led asset sales are forced processes; cleared deals provide price discovery and a roadmap for further hospital carve-outs.
Date of appointment or announcement: 13 Feb 2026
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CAPITAL STACK​
Understanding how capital really moves.

Market summaries are AI-assisted and may contain errors.
This is general information only, not financial advice.

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