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Student Spreadsheet to accompany product W25639

Spreadsheet supplement to case 222048.

On July 8, 2019, Barry Robinson, president and managing director of International Operations for Wyndham Destinations Asia Pacific (Wyndham Destinations AP), and Liam Crawley, chief financial officer, were in receipt of a report provided by law firm Baker McKenzie's Corporate Mergers and Acquisitions team. Wyndham Destinations AP was in the process of acquiring the privately held Resort Frontier Co. Ltd., the management company for Sundance Resort Club. Through an affiliated corporate entity, Wyndham Destinations AP would also acquire all the forfeited and unsold points of Sundance Resort Club. This acquisition would represent the vacation ownership and exchange company's first foray into the Japanese market. Crawley and his team would need to undertake comprehensive external and internal financial analyses and discounted cash flow analysis of Sundance and multiples valuations of comparable firms to help Robinson determine a fair offer price.

Student Spreadsheet to accompany product W25639.

The case features Taste Good Limited (Taste Good), a fictional Hong Kong-based company in the beverage industry. The board of directors has just instructed Alice Chan, the Chief Financial Officer (CFO), to prepare pro forma financial statements for the coming four years, which will be presented to institutional investors. In addition, the pro forma financial statements would help the board assess the company's gearing level for the coming years. Taste Good is required to comply with debt covenants arising from its bank borrowing. One of the covenants states that the firm's gearing ratio shall not exceed 40% for two consecutive years. If such a covenant is breached, there is high risk that the loan will be called for immediate repayment. Using the assumptions in the case, students should assist Alice to draft the pro forma statement of profit or loss and the pro forma statement of financial position. Working on the case will provide students with hands-on experience in performing financial projections and teach them to critically assess the validity of the given assumptions.

Spreadsheet Supplement for Case HK1371

As of 12/31/21, Amazon held $22 billion of equity and warrants in related companies. In fact, it often requests a free grant of warrants when it enters into a new commercial agreement with a supplier. Over the past 20 years, Amazon has gotten warrants in almost 20 publicly traded companies and more than 75 private companies; in a few instances, it has gotten multiple grants from a single company. Combined, Amazon held $3.4 billion of warrants as of year-end 2021. This case explores one of the recent transactions in which Amazon requested warrants as part of signing a new commercial agreement with SpartanNash Company, the fifth largest food distributor in the United States. In September 2020, shortly before Tony Sarsam became CEO of SpartanNash, Amazon proposed a new 2-part agreement. The first part involved a revision to the existing commercial agreement that governed distribution of grocery items from suppliers to Amazon warehouses. The second part involved a free grant of "at-the-money" warrants to buy up to 15% of SpartanNash's shares. The warrants would vest over seven years based on Amazon's cumulative purchases from SpartanNash up to a total of $8 billion. Compared to Amazon's current spending of approximately $400 million per year, this proposal represented a significant opportunity for SpartanNash to grow with one of America's largest and fastest-growing retailers. But that opportunity came at a cost (giving Amazon warrants). Should Sarsam accept the proposal, reject it, or try to renegotiate aspects? More generally, students must assess whether this was an example of a powerful buyer exerting market power over a smaller supplier, or was it an example of a new dynamic partnership that would align interests and share gains through common ownership. In other words, was Amazon's proposal coercive, collaborative, or both?

Unbeknownst to most people, Amazon currently holds $10 billion of equity and warrants in related companies. In fact, it often requests a free grant of warrants when it enters into a new commercial agreement with a supplier. Over the past 20 years, Amazon has gotten warrants in at least 13 publicly traded companies and more than 75 private companies. As of January 2022, Amazon's current holdings of warrants was worth almost $4 billion. This case explores one of the recent deals in which Amazon requested warrants as part of a new commercial agreement. In September 2020, shortly before Tony Sarsam became CEO of SpartanNash Company, the fifth largest food distributor in the United States, Amazon presented the company with a 2-part proposal. The first part involved a revision to the existing commercial agreement that governed distribution of food from suppliers to Amazon warehouses. The second part involved a free grant of "at-the-money" warrants to buy up to 15% of SpartanNash's shares. The warrants would vest over seven years based on Amazon's cumulative purchases from SpartanNash up to a total of $8 billion. Compared to Amazon's current spending of $400 million per year, this proposal represented a significant opportunity for SpartanNash to grow with one of America's largest and fastest-growing retailers. Should Sarsam accept the proposal, reject it, or try to renegotiate aspects? More generally, was this an example of a powerful buyer exerting market power over a supplier, or was it an example of a new kind of dynamic partnership that would align interests the medium to longer term through ownership stakes? "

As of 12/31/21, Amazon held $22 billion of equity and warrants in related companies. In fact, it often requests a free grant of warrants when it enters into a new commercial agreement with a supplier. Over the past 20 years, Amazon has gotten warrants almost 20 publicly traded companies and more than 75 private companies; in a few instances, it has gotten multiple grants from a single firm. Combined, Amazon held $3.4 billion of warrants as of year-end 2021. This case explores one of the recent transactions in which Amazon requested warrants as part of signing a new commercial agreement with Kornit Digital, a small, but rapidly growing digital printing company based in Israel.

In October 2018, Canada legalized recreational use of cannabis. One year later, in late 2019, after share prices had fallen significantly from their peak, investors were looking for favourable investment opportunities in the cannabis industry. HEXO Corp. and Aurora Cannabis Inc. were two cannabis companies that traded on the Toronto Stock Exchange and followed International Financial Reporting Standards. In such a young industry, many companies were still reporting losses. Therefore, potential investors focused on a company’s enterprise value (EV) and used the EV-to-revenue multiple as a useful metric for assessing a company’s value. Before conducting an analysis of the two companies’ values, however, investors had to consider several accounting directives issued by the International Accounting Standards that affected their financial statements. In particular, IAS 41 Agriculture posed various difficulties for Canadian cannabis companies. Investors who were interested in pursuing opportunities in Canada’s cannabis industry had to pay close attention to this accounting standard and to the financial statements of individual companies.

The B case examines the fall of Wirecard and the roles of investors, auditors and regulators.

The case describes a successful Singapore-based venture capital (VC) firm, Openspace Ventures, and its decision to incorporate elements of sustainable investing throughout its business. Similar to many early-stage investors, Openspace's early returns were driven by portfolio companies with a combination of large addressable markets, dedicated entrepreneurs, and a strong product offering aligned with the opportunity. Issues of sustainability or environmental, social, and (corporate) governance (ESG) were not initially part of their process, but after their initial success the founders are interested in "doing well by doing good"-and believe that it will not require sacrificing returns. This case illustrates how traditional early-stage investors such as Openspace can evaluate the trade-offs associated with adding a sustainability component to their investment process. In this brief case we introduce the protagonists, Shane Chesson, his co-founder Hian Goh, and the proposal they deliver to a room full of investors: to integrate sustainable investing principles throughout their successful, traditional VC business. Class discussion should lead to a decision on whether Openspace should proceed with Openhand, and if so, how to successfully manage the implementation.

This technical note provides an overview of key analytical approaches that are useful in assessing the appropriateness of a firm's capital structure and funding plan. This note introduces basic quantitative tools and metrics that are commonly used as inputs to this broader financial planning process. These tools can be useful as part of an initial assessment of a firm's financial health, as well.

In early 2021, an investor had a substantial amount invested in three companies in the Reliance Anil Dhirubhai Ambani Group Reliance Group: Reliance Communications Ltd., Reliance Infrastructure Ltd., and Reliance Capital Ltd. The market price of Reliance Group shares had fallen steeply during the past five years (2016–2020), eroding the wealth of shareholders; consequently, the investor had lost almost all of his investments in the three group companies. Further, in 2019, Reliance Communications Ltd. had filed for bankruptcy. In 2020, the chair of the Reliance Group mentioned that Reliance Capital Ltd. had stopped its lending business and initiated stake sales. The investor decided to sell his shares in Reliance Communication Ltd. and Reliance Capital Ltd. at a huge loss. However, good dividend payments, and positive signals from the Reliance Group chair regarding betterment in the top line, a promotors’ stake increase, and his intention to reduce the companies’ debt to zero in 2020 made the investor hold their Reliance Infrastructure Ltd. shares. Nevertheless, to understand the possibility of improved fundamentals, the investor had to analyze the financial statements of Reliance Infrastructure Ltd., examining these for potential red flags that could identify significant threats to the future of the company and his investments.

The case, "AirAsia Malaysia: The IPO Decision", presents the situation faced by Tony Fernandes, founder and CEO of AirAsia Berhad (AAB), when he and his team of senior managers had to decide whether they should raise funds through an initial public offer (IPO) or through private equity. The airline started operations in January 2002 and became debt-free within eight months. It earned a net profit of RM 49 million on a revenue of RM 392.7 million in 2004. The AAB planned to buy planes and augment its fleet of 17 aircraft. Fernandes wanted to replicate his low-cost model in other countries as well. In November 2003, he entered into a collaboration with Shin Corporation of Thailand to start a budget carrier there. The team needed RM 800 million to buy more aircraft to expand its business. Going public would mean greater administrative burden on the small team of managers. Fernandes had the choice of going through private placement and raise funds, which would mean control in the hands of a few as opposed to diffused control in a public offer. In this context, he wondered what could be done.

Chonladet Khemarattana, CEO of Robowealth Group, an investment advisory company, wanted to disrupt the traditional investment advisory industry in Thailand by promoting greater financial inclusion. He founded a financial technology (FinTech) start-up, Robowealth, that could provide investment opportunities for every Thai citizen; it would help Thais achieve financial freedom. The traditional investment advisory industry helped high net worth individuals (HNWI) build their investment portfolios. This process required relationship managers to understand the investment goals, risk tolerance and time horizon of their clients before implementing an investment strategy. Robowealth used technology to build user-friendly digital platforms that used algorithms to drive investment decisions. It sought to capitalise on the digitisation trend to reach consumers through an easy-to-download app. Even low-income workers would be able to make small investments and benefit from diversification. Robowealth also developed a business-to-business (B2B) channel that allowed collaborations with other industry players in order to build a more efficient financial ecosystem for locals.

In November 2021, Girish Nadkarni, the head of TotalEnergies' corporate venture capital arm (TEV) was considering whether, and on what terms, to exit an investment in Hyzon Motors, a start-up supplier of hydrogen-powered trucks. TEV had invested $4 million in Hyzon, which had gone public in July 2021 with a $2.7 billion valuation. Nadkarni was now eager to take TEV's gains, but recognized the potential harm that selling TEV's Hyzon shares could cause. Market observers might interpret TEV's exit not as profit-taking but as an early investor's lack of confidence in Hyzon's prospects. Further, TotalEnergies had signed an MOU with Hyzon to bring 80 trucks to Europe-the goal was to demonstrate for its truck fleet customers the viability of hydrogen as a viable replacement fuel for the diesel it already supplied. Selling the Hyzon shares might convey the opposite message.

In 2019, an investment analyst for a hedge fund firm based in the Bahamas was tasked with evaluating his firm’s exposure to the automotive industry. The hedge fund firm held various large positions in the automotive segment, most notably in two equities—Fiat Chrysler Automobiles N.V. and Ford Motor Company. The analyst decided to focus on these global industry giants as a proxy for the broader automotive segment. His manager expected an assessment of the industry’s prospects, so the analyst had to decide if the past stock performance of the two companies was a fair indicator of each company’s and the industry’s future. He also had to consider why one company would lose almost twice as much value as the other in one specific period. And why did the stock of the more diversified company experience the steeper decline? The analyst was eager to answer these and other questions, both for his own and his manager’s interest.