Total net proceeds from the spin - out will go towards reducing debt, but a further negative debt adjustment is clearly required. (wexboy.wordpress.com)
I normally prefer to avoid companies with a ratio above 15 % — otherwise, I'll add a specific / severe debt adjustment to my intrinsic valuation. (wexboy.wordpress.com)
Now, this means underlying interest coverage isn't great either — I should probably haircut my P / S valuation accordingly, with a negative debt adjustment. (wexboy.wordpress.com)