International Corporate Finance Assignment
The R.J. Reynolds International ("RJR") Financing Case Study.
1. Examine the types of securities being recommended to RJR as financing alternatives in August, 1985. As RJR's treasurer, comment on which specific types of securities you would be considering as well suited to RJR's current liability structure and overall financing program. (NARRATIVE) 3 maximum pgs
Acquisition 4.9 Billion +12 Billion in taxes +12 Billion in preferred stock?
- debt or equity?DO NOT ARGUE BOTH
- if debt what maturities?
- fixed rate or floating rate?
- currency match or mismatch?
- issue in domestic, foreign, or Euromarkets?
2. What are the all-in costs after hedging of the following six alternatives given the pricing quotes shown in the case's Exhibits 7, 8 and 9?
SIX SPREADSHEETS AND NARRATIVE
Eurodollar bond
Euroyen bond with yen cash flows hedged into dollars
- using foreign exchange long dated forward contracts
- using a currency swap
Dual currency bond with yen cash flows hedged into dollars
- using foreign exchange long dated forward contracts
- using a coupon only currency swap
Dual currency bond with the final dollar principal payment hedged into yen and then all yen cash flows swapped into dollars
3. Assuming that RJR decides to issue a 5-year off-shore bond, which one of the six alternatives listed in 2.) above would you recommend? Defend your recommendation bearing in mind that cost may be only one of several key criteria important to RJR.
Attachment:- Case Study.rar