Times Mirror Co. (TMC) has an important component of Netscape common stock purchased before Netscape’s IPO, on which they significant unrealized gains. TMC is restricted from selling the shares in a public offering and therefore is considering a proposal from Morgan Stanley Premium Equity Participating Securities (PEPS) to output to monetize its holdings Netscape. This would PEPS interest quarterly and are redeemable in five years tied to a prize of Netscape shares, subject to cer … Read more »

Times Mirror Co. (TMC) has an important component of Netscape common stock purchased before Netscape’s IPO, on which they significant unrealized gains. TMC is restricted from selling the shares in a public offering and therefore is considering a proposal from Morgan Stanley Premium Equity Participating Securities (PEPS) to output to monetize its holdings Netscape. This would PEPS interest quarterly and are redeemable in five years tied to a prize of Netscape shares, subject to certain formulas and call provisions effectively split the head in Netscape camp between TMC and the PEPS investors. The tax treatment of PEPS, while it is unclear is essential.
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from
Peter Tufano,
Cameron Pötzscher
Source: Harvard Business School
15 pages.
Publication Date: Apr 19, 1996. Prod #: 296089-PDF-ENG
Times Mirror Co. PEPS Proposal Review HBR case solution