In this workout, what we've been asked to do is find out where the fees are going, who ends up with them given a more complicated syndication. This is a two stage syndication. And so initially the project needs 2000 and the MLA is going to initially sell down to the first stage of the syndication. So very big banks and it's gonna sell down half. And then as part of the second round, the MLA will sell half of the remaining. And the big banks that were in the first stage will also sell half of what they were given by the MLA in the first place. So it's a little complicated, but this table is gonna help us because it's gonna help us to put things into stage one, stage two, figure out who holds what at the end of stage two, and then we can compare it against the fees and see who does best out of this and what the kind of balance of power is in terms of where the fees go. So the first thing to realize is that the end of stage one, there was 2000 of debt issued in total, and the MLA has offloaded half of that to the co-lead arrangers being the initial syndication. Now that means that the other half, okay, so the other half of the 2000 ends up in the hands of the co-lead arrangers and at the end of the stage one, the other banks, the participants, you could call them or the arrangers, they're not even involved yet. So they haven't got the hands on any of it. Okay, so now we enter the second stage and what we're trying to do now is figure out how much the MLA, the co-lead arrangers and the other banks end up with. So the MLA has ended up getting rid of half of this and you can see that up here, amount sold down by the MLA in the second stage syndication. So the way that we'll do that is we'll say, actually let's take one minus that. It's gonna amount to the same thing, but it's a little more accurate. And we're gonna say we'll have that of the initial left. Okay? So we're gonna end it with half of it. It's a complicated way of doing that. Now actually, that's gonna be exactly the same for the co-lead arrangers. And you can see I'm hitting F2 because I'm gonna base it on the cell to the left. And you see that blue cell up there. If I copy and then paste this down, I'm just gonna check it. Yep, it works. Okay. So I can copy that down. And you can see that the MLA and the co-lead arrangers have offloaded half of the remaining debt. And where's that gonna go? Well, it's going to go over here. So there was 2000 of debt to start with and the amount that will be with the other banks will be the remainder. And so the other banks will be holding 1000 of that debt now. And what we should do now is figure out the fees and then see what kind of Balance of fees there are in this kind of fee waterfall. Okay, so let's take a good look at the fees. You can see that the arrangement fee initially is 1.8 and the MLA will take that and administrate it. Now the MLA is gonna keep 0.8 of that. So let's put that in straight away. Okay? They're gonna take 0.8 of that, and that would be based on the total amount. That's an important fact. It won't be based on the amount left on their books. It will be based on the total amount arranged in the first place and kind of underwritten administrated.

Now the co-lead arrangers, we also know how much they're getting. They've been able to negotiate 0.5%. And again, that will be as a total.

Now we don't know how much is available for the remaining banks, but it's not too bad. Because we can say from the 1.8, the MLA kept 0.8, co-leads kept 0.5. And so the remaining banks it stands to reason would be left with 0.5.

Now, if we relate that to a total, it'll actually be end up being the same as the co-lead arrangers.

Okay? And now you can see a sense of scale coming out. If we add a column here and we say, fees per loan dollar held, we can then say, well, how much feed do you get per dollar that you're having to lend? Okay. You can see that ends up as 3.2% for the MLA. Let's see how it pans out for the others. You can see that in terms of efficiency or return on investment, you could sort of think about it like, being the MLA is the most lucrative, and that's because they're taking quite a big risk initiating this, doing a lot of work, doing the administration. The co-lead arrangers are kind of a lesser version of that, and that's because they themselves are doing a fair bit of arranging as well in administration. And then the participants there are the least involved, the most passive. And so they get a smaller cut of the fee.