BEAV was a greatly leveraged business in the aircraft products industry that is cyclical. Its business was threatened by the terrorist act of September 11, 2001, the outbreak of SARS in 2003 and the war in Iraq in 2004. These occasions discouraged Americans from flying, breaking airlines and reducing their investments onthe aircrafts. The company sold 18.4 million shares of common stock, as a result raising$156 million to pay down some of its high-cost debt, as well as it reducedinterest expense and attained a more balanced capital structure.
Still, after restructuring, debt on a pro forma basis would make up 79 per cent of its long-term capital. The chief financial officer was contemplating the business might achieve it and a more suitable debt goal. Further, he was considering a $50 million reduction in debt from available cash. Students are to recommend a target capital structure and measures to reach it. Data are available to use theoretical and practical approaches to making recommendations in advanced undergraduate and graduate classes.
Publication Date: 06/26/2009
This is just an excerpt. This case is about Finance
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