Two investment bankers are preparing an offer to present to a potential client, Swiss chocolate maker Chocoladefabriken Lindt & Sprungli AG. The business has kept cash standing equal to about 7.7% of revenues, more than what most businesses need.
The bankers determine to propose the chocolatier apply the extra cash to paying down short-term and maturing long-term debt, then take on significant new long-term debt to create a tax shelter and buy back shares. In this situation, pupils consider the financial reasoning for the suggestion and analyze Lindt's balance sheet and other data prior to examining what size of bond issue should be proposed.
Learning Objective: How much debt makes sense as investment bankers consider proposing a bond issue to a Swiss chocolate maker?
Publication Date: 10/26/2010
This is just an excerpt. This case is about Finance
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