Q. Case: Restructuring BAESA

Case Questions

1. Is an out-of-court restructuring the best way to deal with the industry’s problems?

2. As a bondholder, should you tender your bonds to the industry under the proposed exchange offer? As a financial advisor to BAESA, would you have designed the exchange offer any differently?

3. As a shareholder, should you subscribe to the proposed equity rights offering? Since the rights offering gives shareholders a way to retain their ownership in the industry, and reduces the industry’s financial leverage as well, do you think it represents a sensible approach for restructuring distressed industries in general?

4. Does the proposed financial restructuring provide a permanent solution to BAESA’s problems?

5. Explain how will PepsiCo’s involvement in this case affect the nature of the negotiations and the likely outcome of the restructuring?