The Senior Financial Analyst for Kingston-Murray Enterprises must decide which technique to recommend the financing of the company’s Chief Financial Officer. The lawyers of the recent discoveries of gold and sulfur reserves have created a need for $ 500 million operating cash. Because of the company’s low-rated and high cost of borrowing, the management has limited funding decisions either ordinary shares or convertible bonds. The zero coupon bond is a LYON (including cash .. Read More »

The Senior Financial Analyst for Kingston-Murray Enterprises must decide which technique to recommend the financing of the company’s Chief Financial Officer. The lawyers of the recent discoveries of gold and sulfur reserves have created a need for $ 500 million operating cash. Because of the company’s low-rated and high cost of borrowing, the management has limited funding decisions either ordinary shares or convertible bonds. The zero coupon bond is a LYON (liquid-yield option note). Before recommending whether LYONs issue, the analyst wants to subordinate the full details of these, zero-coupon, callable, uncontested, to understand convertibles.
This is a Darden case study.
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from
Kenneth Eades
Source: Darden School of Business
21 pages.
Publication Date: Nov 14, 1995. Prod #: UV0610-PDF-ENG
Kingston Murray Enterprises HBR case solution

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