Corporation Restructuring Let’s Do Amazing! HP engineer : Albert Ding 1
Overview 1 Financial Markets 2 Dividend Policy 3 Mergers & Acquisition 4 Bankruptcy 5 Foreign Exchange 6 International Trade 2
Financial Markets & Securities Offering Long-term debt Capital Treasure Equity bills/ Securities Notes/Bonds Financial Agency securities MoTax-exempt ney Masecurities rkets Other short-term sources
Financial Markets IPO New York PrimaryStock Auction Financial market Secondary markets OTC markets NASDAQ
Efficient markets hypothesis Fundamental Primary analysis information EMHStrong form Public information Semi-strong form Technical analysis Weak Form
Dividend policy & Share Repurchase (1)Legal restriction (2)Stability of earning (3)Rate of growth (4)Cash position (5) Restriction in debt agreement (6) Tax position of shareholder (7) Residual theory of dividend
Important Days For Dividend Declaration Ex-dividend date daRecord date te Dividend date 4 business days
Types of Merger Horizontal Vertical Congeneric Conglomerate
Types of Combination Merger Consolation Acquisition
Opposition of combination Ways Definition Greenmail Negotiate exit price with the target firm Staggered election of director Required minimize time to replace managers on Golden parachutes Large package for Management’s leaving Fair price provision Increase Buying cost with more fair price Going private Buyout by person Position pill Give preferred stock authority to the shareholder Flip-over rights Flip-in rights Issuing stock Issuing more stock increase buying difficulty Reverse tender Respond the acquired control ESOP Employee Stock Ownership Plan White knight merger Invite friendly company buy out Grown jewel transfer Reducing interest by Sell the worthy asset outside
Other restructuring Ways Definition SpCreate new entity to shareholder base on stock in-off rate hold Divestiture Sale of an operating unit to third party Leveraged cash-out Borrow debt to issue dividend Equity carve-out Decrease the control rate of equity by sale stock Letter stock Tracking stock/targeted stock
Undervaluation Q ration: (market value of the firm’s securities ÷ replace cost of its assets) 市净率 P/B: price per share/ net book equity value per share
Benefits From Combination Inefficient management replacement Operational synergy Financial synergy Greater market power New investment chance & strategic position Tax benefit
Class of priority claims Administrative expense & Collecting estate expense Unsecured credit after involuntary case but before trustee Workers’ wage within 90 days , < $4650/person Employee unpaid contribution whining 180days < $4650/person Customer deposit and governmental taxes Unfunded pension plan liabilities General or unsecured creditor
BankruptcySignsElect permanent Reorganization?Not paying trusteeApproval with dueTotal Amounplant> = Or 120 days Creditors>$11625prior to =12fillingNYYCreditors>= 3Amount>= Filed $11625bankruptcy petitionDebt impairedDistribute by Operate the Liquidationpriorityreorganization2/3 approval debt impairedStop Stop Process of bankruptcy Appoint Appoint Confirmed interim committee of reorganizationtrusteeunsecured claimsBankruptcy CourtDebtorCreditorBankruptcy CourtDebtorCreditor
Liquidated under chapter 7 >= 12 < 12 persons persons At least 3 creditors with 1 creditor with unsecured unsecured claim claim >= $ 11625 >= $11625
Reorganized under chapter 11 (1)Primary purpose: continuation of business (2)Commenced by filling petition. (2)Condition : 2/3 creditors impaired, bankruptcy court approved. (2)Put in effective after accepted by all class impaired creditors.
Foreign exchange Exchange Fixed / rate floating Currency Fixed : Gold appreciates standard Currency Floating depreciates exchange rate Relative Equilibrium change exchange rates
Exchange fluctuations •Purchase-power parity Long-term theorem •Economic activity Medium-term •Interest rate Short-term
Equilibrium Exchange rate Price Supply PA Deficit P e PB Surplus Demand Quantity
Exchange rate Forward exchange rate/Spot exchange rate = (1 + Foreign interest rate) / (1 + Domestic interest rate)
Annual effect on the market (Forward exchange rate - Spot exchange rate) * number of forward periods in the year
Advantage of foreign investment (1)Lower taxes in the foreign nation (2)Annual depreciation allowance (3)Access to foreign capital sources
Disadvantage of foreign investment (1)Higher cost of capital (2)More difficulty to manage foreign company (3)Ownership rights evidenced by American depository receipts
Multinational corporation-Home country BeneAdverse fits effects 1Improve earning & exports of of job & tax t flexibility of operation ability to in foreign political system obtain resource More risk of expropriation of free advantage trade over domestic company
Multinational corporation-Host country BeneAdverse fits effects New investment net capital of capital outflow output Profit lost to lower tax & efficiency or restrictions country of Engaging in anti-competition competive activity
Methods of financing Cross-border factors Letter of credit Banker’s acceptance Forfaiting Countertrade
Process of letter of credit Ship Applies letter document of credit orrespondent Importer Home bankC bank Send Take Transfer goods Ship document Carrier Exporter
Questions HP engineer :Albert ding
