Case Name :      Kingston-Murray Enterprises

Authors :           Kenneth Eades

Source :             Darden School of Business

Case ID :           UV0610

Discipline :        Finance

Case Length :    21 pages

Solution Sample availability : YES

Plagiarism : NO (100% Original work)

The senior financial analyst for Kingston-Murray Enterprises, must decide what funding technique to recommend to the company’s chief financial officer. The firm’s recent discoveries of gold and sulfur reserves have created a need for $500 million in operating cash. Because of the company’s low credit rating and high cost of borrowing, senior management has restricted the financing choices to either common stock or convertible bonds. The zero-coupon convertible under consideration is a LYON (liquid-yield option note). Before recommending whether to issue LYONs, the analyst wants to understand fully the details of these subordinate, zero-coupon, callable, putable, convertible notes.