Case

Case Solution for The Buyout of AMC Entertainment

Complete Case details are given below :

Case Name : The Buyout of AMC Entertainment

Authors : Susan Chaplinsky, Vikram Patra, Stephan Oppenheimer

Source : Darden School of Business

Case ID : UV0473

Discipline : Finance

Case Length : 26 pages

Solution Sample availability : YES

Plagiarism : NO (100% Original work)

Description for case is given below :

In July 2004, J.P. Morgan Partners (JPMP), the private equity arm of JPMorgan Chase & Co., was in the midst of formulating the final terms of a public-to-private buyout proposal for AMC Entertainment Inc. (AMCE), a publicly traded movie theater company.

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Case Solution for The Case of Sovereign Wealth Funds: A New (Old) Force in the Capital Markets

Complete Case details are given below :

Case Name : The Case of Sovereign Wealth Funds: A New (Old) Force in the Capital Markets

Authors : Yiorgos Allayannis, Rachel Loeffler

Source : Darden School of Business

Case ID : UV1059

Discipline : Finance

Case Length : 09 pages

Solution Sample availability : YES

Plagiarism : NO (100% Original work)

Description for case is given below :

In mid-January 2008, Merrill Lynch announced a $6.6 billion mandatory convertible-preferred share issuance, much of which was placed privately with the Kuwait Investment Authority (KIA), the Korean Investment Corporation (KIC), and the Mizuho Corporate Bank. The case is set amid the subprime-mortgage crisis, which plagued banks and depleted their capital. It focuses on the decision of John Thain to issue capital and place it with sovereign wealth funds (SWFs) in an effort to stabilize the company and put it on the road of growth and profitability again. The case describes the various types and origins of SWFs, their orientation, and their recent intensive investment activity in the global financial-services sector. The case also discusses the transparency of SWFs and their role in the global financial system as liquidity-providing long-term players. Finally, Merrill Lynch’s decision to issue the specific financial instrument to replenish its capital (mandatory convertible-preferred) and its terms are analyzed.

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Case Solution for Investing in Sponsor-Backed IPOs: The Case of Hertz

Complete Case details are given below :

Case Name : Investing in Sponsor-Backed IPOs: The Case of Hertz

Authors : Susan Chaplinsky, Felicia C. Marston, Michael Pozzi

Source : Darden School of Business

Case ID : UV1409

Discipline : Finance

Case Length : 21 pages

Solution Sample availability : YES

Plagiarism : NO (100% Original work)

Description for case is given below :

In November 2006, Alec Berg, a successful hedge fund manager, must decide whether to invest in the initial public offering (IPO) of the Hertz Corporation. The IPO followed a leveraged buyout (LBO) of Hertz that was completed in December 2005 by three prominent private equity firms that had combined to purchase Hertz from the Ford Motor Company for $14.9 billion. The LBO sponsors had borrowed an additional $1 billion on top of the buyout financing to pay themselves a special dividend in June 2006. This loan would be repaid with the IPO proceeds and any remaining proceeds from the IPO would go to the sponsors. The IPO generated widespread criticism with respect to the speed with which the IPO was conducted and the payment of special dividends. In the face of this criticism, the demand for the Hertz IPO weakened, and the offer price was reduced from the initial file price range of $16-$18 to just $15. Berg must assess whether at $15 per share, Hertz offers an attractive investment for this fund. The case provides the necessary information for students to analyze the sponsors’ returns on their investment in Hertz and the attractiveness of the $15 offer price to public shareholders. The case also offers an opportunity for students to discuss the controversy surrounding the payment of special dividends and the claim that private equity sponsors invest with a long-term perspective that creates value for the company.

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Case Solution for Rosetta Stone: Pricing the 2009 IPO

Complete Case details are given below :

Case Name : Rosetta Stone: Pricing the 2009 IPO

Authors : Michael J. Schill, Suprajj Papireddy

Source : Darden School of Business

Case ID : UV3930

Discipline : Finance

Case Length : 23 pages

Solution Sample availability : YES

Plagiarism : NO (100% Original work)

Description for case is given below :

This case examines the April 2009 decision of Rosetta Stone management to price the initial public offering of Rosetta Stone stock during one of the most difficult periods in capital-raising history. The case outlines Rosetta Stone’s unique language learning strategy and the associated strong financial performance. Students are invited to value the stock and take a position on whether the current $15 to $17 per share filing range is appropriate. The case is designed to showcase corporate valuation using discounted cash flow and peer-company market multiples. The epilogue details the 40% first-day rise in Rosetta Stone stock from the $18 offer price. With such a backdrop, students are exposed to one of the well-known finance anomalies-the IPO underpricing phenomenon-and are invited to critically discuss various proposed explanations.

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Case Solution for Delphi Corporation

Complete Case details are given below :

Case Name : Delphi Corporation

Authors : Kenneth Eades, Gaurav Gupta

Source : Darden School of Business

Case ID : UV5601

Discipline : Finance

Case Length : 17 pages

Solution Sample availability : YES

Plagiarism : NO (100% Original work)

Description for case is given below :

This case is suitable for students just beginning to learn finance principles but is also appropriate to use in courses with experienced students and executives. The challenges facing the auto industry and the unique involvement of GM makes the case rich in discussion opportunities about how best to restructure a company. In January 2008, Delphi Corporation (Delphi) had been in Chapter 11 bankruptcy for more than two years but appeared to be on the brink of approving a plan of reorganization (POR) that would allow it to emerge from bankruptcy with a significantly improved balance sheet. Like most such plans, Delphi’s POR called for a reduction of the company’s leverage by exchanging the debt of the unsecured creditors for a mixture of new debt and new equity. The resulting reduction in interest expense was projected to return Delphi to profitability and make the restructured company a viable going concern. Students take the position of various claimants to explain why that claimant class would or would not vote for the plan.

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Case Solution for Braintree Momentum Equity Fund

Complete Case details are given below :

Case Name : Braintree Momentum Equity Fund

Authors : Michael J. Schill

Source : Darden School of Business

Case ID : UV5609

Discipline : Finance

Case Length : 06 pages

Solution Sample availability : YES

Plagiarism : NO (100% Original work)

Description for case is given below :

This case considers the viability of a momentum-oriented trading strategy in U.S. equities in 2006. The case, created for use in an investment course, provides both historical performance on the trading strategy and provides the universe of U.S. equity return data in which to execute a proposed strategy.

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Case Solution for Breeden Electronics (B)

Complete Case details are given below :

Case Name : Breeden Electronics (B)

Authors : Luann J. Lynch

Source : Darden School of Business

Case ID : UV1732

Discipline : Finance

Case Length : 06 pages

Solution Sample availability : YES

Plagiarism : NO (100% Original work)

Description for case is given below :

This case builds on the A case. Marlene Baer, the controller of Breeden Electronics, recognizes that grouping all manufacturing overhead costs together and allocating them to Breeden’s two products is not very accurate. She groups overhead costs by activity and then allocates them to the two products. The system resembles a simple activity-based-costing system. This is the second in a series of three cases that can be used to explore the evolution of cost systems. The main issues of the three cases are as follows: in the A case, the company uses a traditional costing system. The main questions relate to breakeven analysis and the effect of inventory buildup on profit. The B case introduces the definition of activities, costing those activities, and computing product cost based on their use of the activities. The revised product costs are not dramatically different, but analyzing what causes the differences is important to discovering where ABC can provide valuable information. The C case takes place after the end of the year, when profits have been reduced by the need to take care of a growing and increasingly complex packing and shipping activity. The controller defines a new activity (order handling), computes the cost per order, and begins to revise the data on product profitability and to develop new data on customer profitability. Having discovered the high cost of handling each order, the controller now has good reason to work on activity-based management: making that process more efficient, and perhaps more customer friendly.

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Case Solution for Structured Notes

Complete Case details are given below :

Case Name : Structured Notes

Authors : Kenneth Eades, Surendra Bashani

Source : Darden School of Business

Case ID : UV5605

Discipline : Finance

Case Length : 10 pages

Solution Sample availability : YES

Plagiarism : NO (100% Original work)

Description for case is given below :

The case is appropriate for use in finance courses but requires knowledge of option pricing, including put-call parity. Students should also have had exposure to the principles of financial engineering. Can be taught as part of a risk-management module in a corporate finance elective also is appropriate for a derivatives course from the standpoint of designing and pricing a financially engineered product. The risk management aspect of the case is conducive to productive discussion regarding the regulation of derivatives as part of the reform of the financial system in reaction to the financial crisis. This case describes a structured note marketed during the aftermath of the financial crisis of 2007-08. The security in this case was an index knock-out note, which had been designed by Credit Suisse for the private banking market. Adopting the viewpoint of a private banking client, students must decide whether they would invest in the note based on its unique risk profile.

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Case Solution for Husk Power Systems: Financing Expansion

Complete Case details are given below :

Case Name : Husk Power Systems: Financing Expansion

Authors : Elena Loutskina, Manoj Sinha, Chip Ransler

Source : Darden School of Business

Case ID : UV5625

Discipline : Finance

Case Length : 20 pages

Solution Sample availability : YES

Plagiarism : NO (100% Original work)

Description for case is given below :

Husk Power Systems, a young but widely celebrated firm based in India, needs $1.5 million to $2.5 million of expansion capital to grow quickly beyond the small footprint it had established in northeast India. It is a successful green energy enterprise that aimed to provide electricity to millions of rural Indians in a financially viable way. With 10 “mini power plants” that use rice husks as a fuel source and a presence in 25 isolated Indian villages as of April 2009, the company’s goal was to reach 350,000 to 400,000 consumers in 400 villages by the end of 2011. It is offered a convertible note financing structure by a cleantech private equity firm and needs to assess whether it suits the company’s and founders’ interests.

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Case Solution for H. J. Heinz: Estimating the Cost of Capital in Uncertain Times

Complete Case details are given below :

Case Name : H. J. Heinz: Estimating the Cost of Capital in Uncertain Times

Authors : Marc Lipson

Source : Darden School of Business

Case ID : UV5147

Discipline : Finance

Case Length : 08 pages

Solution Sample availability : YES

Plagiarism : NO (100% Original work)

Description for case is given below :

Given recent changes in market conditions and ongoing market uncertainty, an internal financial analyst at Heinz must estimate the company’s weighted average cost of capital (WACC). Data for both Heinz and comparable firms are provided. The case provides opportunities for students to learn or practice a WACC calculation while exploring the economic meaning of inputs to the calculation.

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