Apax partners ad Xerium S.A. Essay

Profitability of oil companies declined due to low prices; and most of these firms responded with cost-cutting measures. Many top companies divested their marginal properties, seeking to consolidate and rationalize their productive assets- one of which was Amoco Corporation. Amoco Corporation conducted an extensive review of its cost structure and profitability (p.2), leading to major restructurings to better focus on its core businesses. The result of this was a divestment of the middle section of its assets along marginal curve. Morgan Stanley advised and assisted in the process, creating MW Petroleum Corporation – a new, free-standing exploration and production oil and gas company. MW was offered to a number of targeted international petroleum concerns, but the most attractive offer came from Apache Corporation. Apache Corporation was an independent oil and gas company based in Denver, Colorado engaged in exploration, development, and production of oil and natural gas. Their strategy, “rationalize and reconfigure” involves acquiring producing properties whose operations Apache could quickly control and make more efficient, producing significant cost-saving opportunities for the company. The sale of MW Petroleum provides such an opportunity for them. However, Apache must first carefully evaluate MW’s value to come up with a proposal that would be attractive for Amoco and profitable for Apache as well. CRITICAL ANALYSIS

In Energetics meets Generex negotiation, I was acting as a Chief Operating Officer (COO) for Energetics Corporation and my opponent and my classmate Chace Eskam was acting as a COO of Generex Corporation. In this deal, as a COO I was supposed to sell the Wind energy division of the Energetics to Generex. Energetics Corporation was in desperate need of cash due to bankruptcy. Another hurdle was that I could not sell three different locations of Wind plants individually. My company needed cash within three months with no additional terms added to this deal. My another best alternative was to sell all the assets of Wind Energy division to generate some cash if deal with Generex fails in this negotiation. Our negotiation went on for 15-20 minutes during class time and deal was set in $247 millions. My opponent Chace was very tough in this negotiation to deal. He was very prepared with facts and numbers before he came to the table. My opponent asked me lot questions such as the depreciation of the property, equipment’s life, taxes etc. After having lot of discussion we ultimately came to the conclusion that Generex will pay Energetics $247 million right away in cash to purchase Wind Energy division from Energetics.

1. How did you plan for the negotiation? Explain how you decided on a strategy?

They describe several events in a short timeline where trillions of dollars hung in the balance. The authors additionally write about the role that the Federal Reserve played in the financial crisis as well. Primarily, the Federal Reserve's purchase of commercial paper in 2008 immediately contributed to the stabilization of the market. Early on in the article, the authors state that their objectives for the article are to analyze commercial paper during the crisis. They do this by providing an institutional background of commercial paper, the supply & demand of the market, as well as what they perceive as the most important events during 2007 2009 related to both the financial crisis and

Corporate reorganization is definitely an available option. The company should be structured as a parent-subsidiary controlled group. The restructuring should be performed in conformance to any and all tax-saving codes and provisions.

Aside from the two aforementioned proposals the company can raise its leverage in other ways. By conducting DuPont analysis and understanding operating leverage we see that purchasing fixed assets and decreasing stockholder’s equity will raise the equity multiplier and the firm’s operating leverage. In this instance we recommend against this approach as the firm already has a large amount of excess cash above what they require to fund new positive NPV projects and purchase new assets. Investors would rather see their capital returned to them in the form of share repurchases and dividends as it is evident by the company’s cash stockpile that they can

While it was foreseen that the company would initially take financial setbacks because of the reorganization, it was not believed that the financial risks would be drastic. However, the impending report that Mr. Elesser has to present to the board will detail a net income that will be nearly 26 million dollars in the red for 2004 (see exhibit 2)3. The blunt force restructuring met resistance on numerous fronts. First of all, the various components of the company did not operate under the same uniformed leadership objectives. Each division was set up to look out for their own interests and markets. When the restructuring plan that focused on a more centralized management process, many of the things that worked for one division did not necessarily work for other divisions of the company. This left some divisions at a severe disadvantage. Another obstacle that worked against the restructuring was the employee unions in which the company had to deal. The unions were not on board with the various downsizing and restructuring methods. In addition, the company had to deal with a couple of different unions which posed a problem with negotiating tactics. Benefit costs were also a significant investment that did not hold up well under the auspice of restructuring.

Premiums associated with tender offers, as measured against stock prices one day or one week prior to the offer announcement, would be affected by information leakage and the extent to which a company was viewed as “in play” by the arbitrage community. And the issue of fairness would seem to depend more on the absolute, not relative, degree to which the Rales brothers’ bid exceeded the current stock price. See exhibits 3 and 4. Do you think analysis in Exhibit 10 justifies rejecting the bid?

Yes, I think that this company should build a new plant that allows them to grow in the industry, even if they are unable to use the Industrial Revenue Bond, they will have other financing alternatives.

The unhealthy financial state of the company could be due to the split from the monopoly. Round 0 financial statements demonstrate last year’s results. The company should look into the future because there is room for growth and financial success. For instance, the company can decide to take long term debt to invest it back into the company. The company can also focus drastically on sales to increase their customer base and obtain a higher market share. If the company takes the right direction of growth, it will quickly become a healthier

The price would determine how big of a percentage impact a $.015 per pound premium on paper purchased from dealers would be over scrap paper purchased at loading docks. Using historical information for the spot prices of scrap paper, in the 1979 to 1980 timeframe, spot prices ranged from $20 to $60 per ton. The $.015 premium becomes more of an issue the cheaper paper is available for purchase at the loading dock. At a spot price of $20 per ton or $.01 per pound, the $.015 per pound premium is 150% of the spot price. At this level, management should be focusing on casual purchases at loading docks. At a spot price of $60 per ton or $.03 per pound, the $.015 premium is 50% of the spot price. Rationalizing the premium will depend on which method is used to compute the cost per bale. When using the original cost report formula, the purchased bales were still cheaper after adding the $.015 per pound premium at all spot prices between $20 and $60 per ton. The prices for purchased bales ranged from $9.12 to $15.12 while the prices for formed bales ranged from $10.41 to $19.41. The purchased bales were more expensive at all spot prices between $20 and $60 per ton when computing costs using the formula proposed by the General Manager. Using the alternate cost report formula, total costs ranged from $10.63 to $16.63 per formed bale and $11.79 to $17.79 per purchased bale. Calculations can be found on the attached

As some of MW’s reserves are actually real options, the APV valuation method actually underestimates the real value of MW acquisition. If Apache defers the exploiting of the reserves, there exists a possibility for the future cash flows becoming even more valuable. For example, Apache could have more precise

Magna International Inc. (Magna) is a manufacturer of automobile parts since its inception in 1957 (At the time was called Multimatic Investments Limited). Founded by Frank Stronach, Magna has since become Canada’s largest automobile parts manufacturer. Magna is the primary supplier of automobile parts to many car manufacturers, including General Motors, Chrysler, and Ford Motor Company.

Within the copper mining industry, there were three dominant players, RTZ-CRA, Noranda, and a joint venture of Inmet Mining and Rio Algom. These three were believed to be the primary bidders. All three had ancillary mineral mining practices aside from copper, as well as other areas of business. RTZ-CRA was the largest of these three, and was believed to be the best positioned to prevail on the bidding. The other bidders were smaller in capital but had the same level of mining experience. The joint venture of Rio Algom and Inmet had only $1.5 billion combined market capitalization, but Inmet had a healthier capital structure and less financial risk which created a lower cost of capital. The bidding rules reduced the sensitivity of capital and created comparative advantages for smaller players.

Regulators could have followed a different restructuring procedure. I suggest debt restructuring because I believe that Bear had enough assets and liabilities to defend against the impending losses. First, debt restructuring is a process that would have enabled Bear to reduced financial distress by either reducing or renegotiating its debts or order to improve liquidity and reduce insolvency so that it may resume normal operations profitably and efficiently. For example, the bondholders at Bear should have borne the losses by agreeing to shift a sum of their assets down in the capital structure by swapping debt in exchange for equity (either common or preferred). This effectively enables