Case Questions Essay

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Case Questions.

A. Williams, 2002.

1. Evaluate the terms of the proposed $900 million financing from the perspective of both parties. How would you calculate the return to investors in this transaction? If you need more information, what information do you need?

2. What is the purpose of each of the terms of the proposed financing?

3. Conduct an analysis of Williams’ sources and uses of funds during the first half of 2002. How do you expect these numbers to evolve over the second half of 2002? What is the problem facing Williams? How did it get into this situation? How has it tried to address the problem it is facing?

4. Some might describe Williams as “financially distressed”. What evidence is there that
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As a USX shareholder, how credible a spokesperson do you consider Icahn to be on this issue?

3. What restructuring option – Icahn’s spin-off proposal or the company’s targeted stock proposal – will create the most value for shareholders? For creditors? For the firm’s other stakeholders?

4. For what kind of companies is targeted stock most appropriate? Least appropriate?

5. Should the company seriously consider any other options besides doing a spin-off or issuing targeted stock?

6. If the company decides to go ahead with the targeted stock issue, what specific provisions or features should the stock include to ensure maximum value creation? How closely would you model USX’s targeted stock on GM’s alphabet stock?

D. Interco.

1. Assess Interco’s financial performance. Why is the company a target of a hostile takeover attempt?

2. As a member of Interco’s board, are you persuaded by the premiums paid analysis (Exhibit 10) and the comparable transactions analysis (Exhibit 11)? Why?

3. Wasserstein, Perella & Co. established a valuation range of $68-$80 per common share for Interco. Show that this valuation range can follow from the assumptions described in the discounted cash flow analysis section of Exhibit 12. As a member of Interco’s board, which assumptions would you have questioned? Why?

4. How would you advise

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