This Case is about FINANCIAL MANAGEMENT, INTERNATIONAL BUSINESS, MERGERS & ACQUISITIONS, NEGOTIATIONS REGULATION
PUBLICATION DATE: February 12, 2014 PRODUCT #: 214027-HCB-ENG
Gives the chance to value a leveraged buy-out; and to analyze the character and extent of the obligations of a company’s to its bondholders. Here, the circumstance is a “going private” transaction in the Europe, where the funding strategy called for further addition to the business balance sheet of a substantial quantity of new debt and an adjustment to the capital structure.
This was approximately the first LBO conducted with an organization that had openly traded investment grade debt owed while leveraged buyouts were used in Europe for many years. The surged debt from the agreement would escalate the risk to the organization and to the recent bonds, and the bonds’ prices would decline substantially as a consequence. Students can utilize discounted cash flow to value the LBO.
They can succedingly consider the wisdom of undertaking the LBO at the price, and work out a complicated debt schedule for the organization. Students must also analyze the consequence of the transactions on the recent bonds, and comprehend the principles evaluating contractual obligations (and the way they vary from fiduciary obligations) towards bondholders (accounting for business and the social culture exterior to the United States) in order to evaluate the most appropriate course of action for the private equity buyers.