Leverage and valuation

1- Debt / Total Assets change in capital structure. And therefore equity changes.
2- As debt protion increases interest rate increases
3- Sales, costs, RFr, Risk premium, EBIT are the same
4- Total Assets are the same. ( Total Assets are the same, debt in structure goes up, total equity goes down)

Results
1- WACC goes up thus the value of the firm goes down
2- EPS calculated on net income goes down when company borrows more (Because equity goes down)
3- EPS calculated EBIT goes up when company borrows more.

Therefore,
For the local shareholder, increasing the debt amount in the capital structure will not hit P&L. Even when the sales are same under different debt scenarios, the higher the debt, the lesser the equity and the more EPS of EBIT. The mistake the foreign did when purchasing local shares was agreeing with the local partner on EBITx multiplier not net income x multiplier When all of the above is happening, the value of the company doesn't change.Plus when KS calls, the local partner will also sell his liability of debt to foreigner so it is a win - win case for the locals.

EBIT X or EBITDA X valuation methods dont usually work for companies with huge bank loans.