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Royal Manufacturing Inc. requires an extension of its temporary $3 million line of credit. Holdbacks on contracts and several years of losses were causing a cash flow problem. The company and the bank must now assess the company's financial needs.

In September 2002, Aluminium Bahrain (Alba) needed to decide how to finance its proposed $1.7 billion pot line. The company's financial adviser, Taylor De-Jongh (TDJ), had recommended Alba employ a multisourced financing strategy using as many as five sources of debt from international, regional, and local capital pools. TDJ believed that the strategy would generate competition among the lenders which, in turn, would save Alba millions in financing costs. But the multisourced financing strategy went against the grain of typical project financings in the Middle East and was not without its risks. Alba management must decide how many financing sources to use, which ones, and how much to get from each one. If the market rejects the multisourced financing strategy, the project might become tainted, which could jeopardize Alba's long-term growth objectives.

The largest wireless paging company in the United States has to restructure its debt in response to the collapse of its market. The restructuring faces formidable challenges. Valuing the company is extremely difficult because Arch's public competitors are also severely troubled and the industry's future is highly uncertain. In addition, the company has an extremely complicated parent-subsidiary holding company structure.

Spreadsheet Supplement for case 205024.

In December 2003, the management teams at the automotive and steel businesses of The Timken Corp., headquartered in Canton, Ohio, were principally in agreement that market price was the appropriate instrument for valuing internal steel transfers. At the same time, both management teams had reservations about details of the implementation of market-based transfer pricing as it stood. Asks students to assess whether the transfer pricing policy for steel transfers inhibited the automotive division from exercising its market power as a purchaser of bearings quality steel. Also asks students to comment on the usefulness of the Minimum Rule, assess Timken's policy of market-based transfer pricing rules for steel, and compare cost-based transfer prices to market-based prices.

RRR, a $1 billion private equity fund, is trying to decide how much to bid for Pacific Salmon Inc. and how to finance the acquisition.

The chief executive officer of Amtelecom Group Inc. must make a recommendation to the board of directors regarding the best way to sell its Amtelecom Communications subsidiary. AGI owns and operates ICS Courier, a national fixed-route courier business and Amtelecom Communications, a regional telecommunications, cable television and Internet business. Amtelecom Communication's capital requirements are not being satisfied because cash is being diverted to ICS Courier to cover its losses. As well, AGI's stock has been performing poorly. In order to alleviate these problems, the board has decided to sell off Amtelecom Communications. The three sales alternatives being considered are: selling to a strategic buyer, IPO via a common share offering and IPO via an income trust offering. This case can be used to teach students about valuation in a strategic setting, and provides an opportunity to apply sum of parts valuation to value a diversified firm, apply discounted cash flow, conduct a transactions analysis to determine the standalone value of a firms, and gain a basic understanding of income trusts.

Discusses the bankruptcy reorganization process, with an emphasis on valuation and capital structure. Serves as the basis for a bankruptcy reorganization game that has been used for many years in Creating Value Through Corporate Restructuring, a second-year finance course. The game is played in Chapter 11, after previous efforts to complete an out-of-court restructuring failed. Students are divided into five claimholder groups--secured debt holders, unsecured senior debt holders, etc.--and these groups, under the supervision of a bankruptcy judge, must negotiate a satisfactory plan of reorganization or suffer significant incremental losses through liquidation. Provides the background information with respect to Delaware's history, prospects, and financial condition necessary to play the game. A rewritten version of an earlier case.

Spreadsheet Supplement for case 205061.

The investment-strategy decisions of a Darden Capital Management student-portfolio management team in 2004 are examined. Case materials allow students to estimate CAPM-based expected returns using market data. The case focuses on introducing the portfolio-allocation decision; exploring the relevance of various investment-risk metrics; developing the intuition of diversification, market risk, and the capital-asset-pricing model; building judgment on how to appropriately estimate the CAPM parameters using available market data; and discussing the fundamental concepts of market efficiency.

Simon Property Group launched a hostile tender offer for upscale Taubman Centers. This case discusses issues of Real Estate Investment Trust (REIT) valuation, financial policy, and corporate governance, as Robert Taubman and his company's independent directors must decide whether to accept the $20 per share offer and, if not, what other action to take.

Laurie Marker, head of the Cheetah Conservation Fund, is trying to form a for-profit institution, the Bush Project, to control the bush encroachment problem in Namibia. Bush encroachment not only destroys the general ecosystem, but it also has a harmful impact on the Cheetah population. Although USAID has provided some initial funding for the project, it will survive in the long run only if it is financially successful. Marker must determine whether the Bush Project is financially viable. This case introduces the reader to the tension between business and the environment in an emerging market.

Introduces the subscriber model as an alternative valuation framework for firms whose revenues can be traced to repeated transactions with customers.

In response to a perceived undervaluation by the capital markets, Nestle is considering divesting a part of its ophthalmology subsidiary, Alcon, and must decide on a listing location. In the process, students are challenged to wrestle with the valuation of a conglomerate, the tradeoffs involved in listing in the United States versus Europe, and the incentive and tax consequences of that listing decision.

The CEO of Amtelecom Group Inc. (AGI) must make a recommendation to the board of directors regarding the best way to sell its Amtelecom Communications subsidiary. AGI owns and operates ICS Courier, a national fixed-route courier business, and Amtelecom Communications, a regional telecommunications, cable television, and Internet business. Amtelecom Communication's capital requirements are not being satisfied because cash is being diverted to ICS Courier to cover its losses. In addition, AGI's stock has been performing poorly. To alleviate these problems, the board has decided to sell off Amtelecom Communications. The three sales alternatives being considered are: selling to a strategic buyer, IPO via a common share offering, and IPO via an income trust offering.

In April 2004, Google announced that it was launching its long-awaited IPO. Looks at the unconventional auction format of the IPO of the world's most popular search engine, the role of investment banks in the IPO process, and the implications for corporate governance and stock valuation of a dual-class share structure.

Two members of Deutsche Bank's Fixed Income Research Group are discussing how to advise clients on bond vs. equity asset allocation. A critical aspect to this asset allocation decision is the equity risk premium. Discusses a unique way developed by the bank for understanding the implications of the risk premium.

Deutsche Bank's Fixed Income Research Group is looking for yield curve trades to pitch to clients as well as for their proprietary trading desk. The group has data on recent bond trades and a proprietary term structure model, which they can use to develop trading ideas.