Times Mirror Co. PEPS Proposal Review Case Solution
This Case is aboutÂ POLICY, RISK MANAGEMENT
PUBLICATION DATE: April 19, 1996
Times Mirror Co. (TMC) possesses a large block of common stock of Netscape which was bought before its IPO, on which it’s significant unrealized increases. TMC is restricted from selling the stock in a public offering and is thus considering a suggestion by Morgan Stanley to issue for the monetization of PEPS holdings.Â These PEPS be redeemable in five years at a cost subject to specific formulas and call provisions efficiently allocating the benefit in the companyâ€™s stock among TMC as well as the PEPS investors and would pay interest quarterly. The tax treatment of the PEPS, while uncertain, is of critical value.