Mci Communocations

The company’s leverage ratio is 28% - 72% of its assets are financed by common equity and the company was profitable in the last reporting period. The company should easily raise additional funds from creditors and a convertible debenture will be an appealing venture for creditors who would want to purchase stocks of the company in the future.

Mr. Shields’ should accept Mr. Fordham’s proposal in relation to the acquisition of Upstate Canning Company, Inc. In this case, Mr. Shields attempts to conclude if he should acquire the company from its owner, Mr. Fordham, using his personal savings of $35,000 in addition to an investment of $65,000 from his associates. Moreover, Mr. Fordham proposes that he will loan Mr. Shields’ $300,000 worth of income bonds, to be repaid in up to 10 years. Mr. Fordham provides Mr. Shields’ with a bond repayment schedule which allows Mr. Shields’ to repay the bonds at a discount if he meets the wishes to repay the bonds back early. Mr. Shields’ faces a

Convertible debt and debt with stock warrants differ in that: (1) if the market price of the stock increases sufficiently, the issuer can force conversion of convertible debt into common stock by calling the issue for redemption, but the issuer cannot force exercise of the warrants; (2) convertible debt may be essentially debt, whereas debt with stock warrants is debt with the additional right to acquire equity; and (3) the conversion option and the convertible debt are inseparable and, in the absence of separate transferability, do not have separate values established in the market; whereas debt with detachable stock warrants can be separated into debt and the right to purchase stock, each having separate values in the market.

The firm has decided to increase the debt finance component portion from 20% to 30% which is a good decision since the interest payments are 100% tax deductible. The appropriate capital structure would be to

The issuance of convertible debt will result in even more cash holdings for Intel, an additional $1 billion. This, at face value, does not solve Intel’s capital structure dilemma of having too much cash. However, Intel can afford to incur more debt financing, since it has relatively low long-term debt. By doing so, its long term debt ratio (using 1991 figure) would change to:

We suggest that the company should take the option 3. Firstly, as mentioned in the above, the company requires $4.8 billion during 1984 and 1990 and option 3 can provide largest fund compared with option 1 and 2. Secondly, the option 3 incurs the least interest rate, 7.5%. Thirdly, even though the company needs to increase the debt ratio in the short run, they can adjust it later with the conversion option, which gives the company flexibility for capital

SGMT  6050  –  Case  Write-­‐Up   McCaw   Cellular  Communications:  The  AT&T/McCaw  Merger   Negotiation     Armin  Ezatagha     Student  Number  ⏐  205  576  707   eMail  ⏐  aezatagha12@schulich.yorku.ca     Schulich  School  of  Business   Tuesday,  March  05,  2013                                 Current  Telecommunications  Ecosystem     McCaw  Cellular  Communications  (MCC),  although  positioned

f) Subordinate debenture has a claim on assets in the event of bankruptcy only after senior debt has been paid off. In

The $7 million is in the form of subordinated debentures that matures in 7 years with an interest rate of 13%. This rate is very high because subordinated debentures investors bear significantly more risk, which is a major drawback of this form of investment since the debt might not be repaid.

Our case study titled, The AT&T and McCaw merger negotiation, provides us with an opportunity to negotiate the terms of the merger between McCaw cellular and AT&T. McCaw was the largest competitor in the rapidly growing cellular telephone communications industry. AT&T was the dominant competitor in long-distance telephone communications in the United States, and one of the largest corporations. Prior to the negotiations, it had no position in cellular communications.

Because of the fact that BHC is a new venture ; the risk is actually high. Mortgage rate appears to compensate for the risk.When BHC had acquired $2,275,000 with a mortgage.

I. BACKGROUND: CelluComm and GMCT and the Industry AT&T’s Bell Laboratories cellular telephone networking innovation had enabled several cellular network operators to get licenses from the FCC to operate in separate license territories right about the same time AT&T was broken up in early 1980s. These operators were either companies like Cellular Communication Services, Inc. (CelluComm) or small entrepreneurs who had won license territories through the lottery system. CelluComm’s  president  and  founder  Ric  Jenkins  was  known  for  being  an  aggressive businessman  who  had  extended  it  to  a  200  million  dollar  enterprise  ranking  in  the  top  20  of  the industry.  Key  to

1. This is a contract from credit card receivables securitization, a kind of bonds finance collateralized by credit card receivables. Every Contract of security has a face value at maturity of $100,000 and will mature in 2.5 to 5 years. The price of the contract changes by 1/32 a point but cannot be 3 points above or below the previous day’s

The company lost money almost every year since its leveraged buyout by Coniston Partners in 1989. The income generated was not sufficient to service the interest expenses of the company which stood at $2.62B in 1996. From Exhibit 1, we can say that interest coverage ratio computed as EBIT / Interest Expense was 1.31 in 1989 and has been decreasing over years and currently stands at 0.59. This raises a question of how the company can meet its interest payments without raising cash or selling assets.

With the three debt instruments in the case, hundreds of millions of dollars would become readily available to the company and be at their disposal. Each of the financing opportunities provides their own money in different forms. Great companies need these different financing ideas to