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The president of Kitchen Helper Inc. is seeking financing for his new invention. Commercial banks have refused to provide any further financing, and the president has rejected offers from venture capitalists. A private investor has expressed interest but wishes to see a cash budget and a pro forma income statement and balance sheet.

The focus of the case is on deal-making in the context of a structured note. The challenge for the student is the placement of US$125 million of Special Purpose Trust (SPT) paper. The financing was to fund SPT's forward purchase of a portion of the future oil production. The structure of the note has to be modified in order to place the paper in a short period of time.

Mike Wilson and Jim Thompson of Northern Mining Inc., a Canadian-listed junior-mining company, deliberated carefully the prospect of acquiring the largest graphite deposit in Ontario, owned by Graphite Mining Corporation (GMC). GMC's U.S. parent company, the Jameson Corporation, had stopped mining operations in the previous year and then proceeded to sell its interest in GMC to Quebec-based graphite producer Graphcar Inc. Over the past five years, CDN$30 million had been spent in developing the mine and erecting a mill, and now Graphcar Inc. was prepared to sell the mill for CDN$1.5 million. (A Microsoft Excel spreadsheet is available for use with this case, product 7A96B014.)

The assistant treasurer of Videotron Ltee (Videotron) pondered over the Citibank proposals that lay on his desk. Videotron was about to launch a US$150 million, 10-year high yield issue in almost a week's time. Since Videotron's business was transacted almost exclusively in Canadian dollars, it would be exposed to foreign exchange risk on the US-dollar denominated interest and principal debt payments. In light of the recent and dramatic depreciation of the Canadian dollar against the U.S. dollar, the treasurer wondered if he should hedge this exposure. The Citibank Canada exposure management team had proposed hedging techniques using either forwards or cross-currency swaps. (A Microsoft Excel spreadsheet is available for use with this case, product 7A96B021.)

The deregulation of the natural gas industry permitted the creation of new companies, gas marketers or gas banks, such as CoWest. Still in its first year of operations, CoWest had the opportunity to bid on a fixed-price long-term contract to supply gas to a cogeneration plant. The focus of the case is to investigate the possibilities of putting a deal together using financial derivatives.

LBT Acquisition Corp. (LBTAC) made a Cdn$24 per share hostile takeover bid for John Labatt Limited (Labatt). LBTAC was a subsidiary of Onex Corporation (Onex), a Toronto-based conglomerate which secured financial assistance from Quilmes Industrial S.A., a Luxembourg-based holding company. Prior to the Onex bid, Labatt had been negotiating a merger with Interbrew S.A./N.V., Belgium's largest brewer. People close to the negotiations indicated they had heard rumors that the Dutch Brewer, Heineken N.V., and others were prepared to make bids. The case is from the perspective of Wood Gundy, the financial advisor to Labatt. The challenge for the student is to structure a deal in order to maximize shareholder value.

One of Cadillac Fairview Inc.'s (Cadillac) key creditors, the Whitehall Street Real Estate Limited Partnership managed by Goldman Sachs & Co., forced Cadillac to seek protection from its creditors under Canadian insolvency law on December 23, 1994. Accordingly, Cadillac was now required to submit to the Ontario General Court a plan to restructure its financial obligations by January 31, 1995, a plan that it hoped would have the support of its various stakeholder groups. Cadillac had grown to become one of the largest developers and owners of prime commercial real estate in North America, with assets of $4.8 billion. (A Microsoft Excel spreadsheet is available for use with this case, product 7A96B013.)

The purpose of this case is to permit a discussion about value creation, performance assessment, the case method and corporate finance. It is intended to be used in the first class in a corporate finance course.

The bank has to decide if and how it will help Columbia Pine Pulp Company (CRP). The bank must evaluate CRP's projections, capital structure, security, proposed design of the financing, interest rate hedging, and other financial decisions. The company is proposing a greenfield pulp mill on the site of a sister pulp mill and an affiliated paper mill. Students are required to develop a financial strategy. (Two related cases bearing the same name examine recapitalization and interest rate hedging - cases 9A90B036 and 9A90B037.)

The Independent Committee of the Board of Directors of Goodyear Canada Inc. must assess the fairness of the proposed Going Private amalgamation received from Goodyear Canada's parent, The Goodyear Tire & Rubber Company of Akron, Ohio. The Goodyear Tire & Rubber Company offered to buy all the common shares of Goodyear Canada not already owned by them (11.2% of the shares issued were in public hands) for $48.00 (CDN) in cash per share. This represented a 22% premium over the closing price on the Toronto Stock Exchange on the previous afternoon.

The setting for the case is a rate hearing to determine the cost of capital for a gas utility. The case provides an opportunity for a full discussion of the issues in estimating the cost of capital for both regulated and unregulated firms. The situation has an added twist in that the company just became a wholly owned subsidiary of British Gas.

A shareholder group of Sherritt Gordon Limited is not satisfied that management was running the company properly and is attempting, through a proxy contest, to have the present board of directors removed and replaced with a new board. The case is suitable for teaching as a role-playing exercise.

Eagle Corp. has made a tender offer for a further 15% of the shares of Blue Jay Energy. The price is well below what some feel is the real value of the shares. The focus of the case is on strategies to close a potential value gap in the context of a hostile takeover bid. The primary alternatives are to rely on a poison pill, spin-off and a leveraged recapitalization. The case is ideal to illustrate the use of the financial markets (synthetic white knight) to negotiate a deal.

The focus of the case is on the privatization of Saskatchewan Oil and Gas Corporation by way of an initial public offering. It is written from the perspective of an investment banker, Wood Gundy, who has been requested to submit a proposal to the privatization steering committee. All aspects of a deal are present; valuation, distribution, corporate governance, security design, ownership restrictions, domestic/global, institutional/retail, etc.

Unicorp Canada has announced a tender offer for Union Enterprises Ltd. Unicorp management must devise a strategy subsequent to the hostile takeover offer. The case illustrates the full range of actions, from political to scorched earth, available to a target in defending itself in a hostile situation. (This is a sequel to Unicorp Tender for Union Enterprises (A), case 9A90B034.)

A positive covenant on a $200 MM floating rate loan required Columbia River Pulp (CRP) to hedge a minimum of $100 MM for at least three years at a maximum rate of 12 percent. The alternatives included interest rate SWAPs, CAPs and COLLARs. What is the optimal hedging structure? Should CRP hedge all of its floating rate debt, or only the amount required under the loan agreement? (This case can be used with two related cases bearing the same name, 9A95B034 and 9A90B036. A Microsoft Excel spreadsheet is available for use with this case, product 7A90B037.)

The executive vice-president of Markborough Properties Inc. was preparing for an upcoming Board of Directors meeting. On the agenda was the proposed use of interest rate hedging to minimize the company's interest rate exposure. Among the alternatives were interest rate swaps and caps. Was it an appropriate time for Markborough to hedge its floating rate debt? If so, how and using what vehicle?