Subject category:
Finance, Accounting and Control
Published by:
Stanford Business School
Length: 9 pages
Topics:
Finance
Abstract
This case concerns the long-term financing of a large advertising firm. The financing alternatives are: (1) utilization of bank lines of credit; (2) a private placement term loan; (3) 20-year debentures in the public market; and (4) common stock. The company is burdened with an overhanging convertible security issue, and faces significant business and financial risk. For the $300 million expansion program, there is a financing trade-off between increasing risk and potential return to stockholders.
About
Abstract
This case concerns the long-term financing of a large advertising firm. The financing alternatives are: (1) utilization of bank lines of credit; (2) a private placement term loan; (3) 20-year debentures in the public market; and (4) common stock. The company is burdened with an overhanging convertible security issue, and faces significant business and financial risk. For the $300 million expansion program, there is a financing trade-off between increasing risk and potential return to stockholders.