Introduction

Case Overview

Assumptions

Analysis

Recommendations
 Conglomerate Industrial Company

Introduction

Case Overview

Automobile Aerospace / Government Industrial

Assumptions

Analysis

Recommendations
 Conglomerate Industrial Company

Introduction

Case Overview

Automobile Aerospace / Government Industrial

Assumptions
Carburetors
Analysis Fuel injection systems

Ignition systems
Recommendations
Sealing systems
 Conglomerate Industrial Company

Introduction

Case Overview

Automobile Aerospace / Government Industrial

Assumptions

Analysis
19,6 % of Sales

Recommendations
 Conglomerate Industrial Company

Introduction

Case Overview

Automobile Aerospace / Government Industrial

Assumptions
Landing gear assemblies
Analysis Aerospace controls

Gas turbines
Recommendations
Jet engine components

Aircraft instrumentation

Firearms
 Conglomerate Industrial Company

Introduction

Case Overview

Automobile Aerospace / Government Industrial

Assumptions

Analysis
Firearms divison on
strike
Recommendations
 Conglomerate Industrial Company

Introduction

Case Overview

Automobile Aerospace / Government Industrial

Assumptions

Analysis
12,5 % of Sales

Recommendations
 Conglomerate Industrial Company

Introduction

Case Overview

Automobile Aerospace / Government Industrial

Assumptions
Electric distribution
Analysis Seals, packing and gasketing materials

Weighting equipement
Recommendations
Machine tools
 Conglomerate Industrial Company

Introduction

Case Overview

Automobile Aerospace / Government Industrial

Assumptions

Analysis
Steel business sold

Recommendations
 Introduction

Case Overview

Assumptions

Analysis

Recommendations
 Leverage Operation

Introduction

Case Overview

Unlock shareholder Increase voting

Assumptions value percentage of RSP

Analysis

Recommendations
 Leverage Operation

Introduction

Case Overview

Unlock shareholder Increase voting

Assumptions value percentage of RSP

Analysis

Recommendations

Leverage Leverage Buyout

Recapitalization
 Leverage Operation

Introduction

Case Overview

Leverage Leverage Buyout

Assumptions
Recapitalization

Analysis

Recommendations
 Leverage Operation

Introduction

Case Overview

Leverage Leverage Buyout

Assumptions
Recapitalization

Analysis

Recommendations
 Leverage Operation

Introduction

Case Overview

Leverage Leverage Buyout

Assumptions
Recapitalization

Analysis General Utilities Rule not aplied

FMC Corp. used it and had success

Recommendations
 Leverage Operation

Introduction

Case Overview

Leverage Leverage Buyout

Assumptions
Recapitalization

Analysis General Utilities Rule not aplied

FMC Corp. used it and had success

Recommendations

Public Shareholders must

own no more than 74,4%
 Leverage Operation

Introduction

Case Overview

Leverage Leverage Buyout

Assumptions
Recapitalization

Analysis General Utilities Rule not aplied

FMC Corp. used it and had success

Recommendations

Public Shareholders
premium of 43%
 Leverage Recapitalization Operation

Introduction For each share

Case Overview

Public Shareholders Retirement Savings

Assumptions Plan (RSP)

Analysis

Recommendations
 Leverage Recapitalization Operation

Introduction For each share

Case Overview

Public Shareholders Retirement Savings

Assumptions Plan (RSP)
One Stub
Analysis
One-time cash distribution

Recommendations
 Leverage Recapitalization Operation

Introduction For each share

Case Overview

Public Shareholders Retirement Savings

Assumptions Plan (RSP)
One Stub One Stub
Analysis
One-time cash distribution Equivalent in Stubs

Recommendations
 Leverage Recapitalization Operation

Introduction To Finance

Case Overview

Bankers Trust Colt Industries

Assumptions Company

Analysis

Recommendations
 Leverage Recapitalization Operation

Introduction To Finance

Case Overview

Bankers Trust Colt Industries

Assumptions Company

Analysis $ 700 million Term Loan

$ 300 million Revolving

Recommendations Credit Facility
 Leverage Recapitalization Operation

Introduction To Finance

Case Overview

Bankers Trust Colt Industries

Assumptions Company
$ 203 million in excess cash
Analysis
$ 550 million 15 – year
subordinated debentures

Recommendations
 Leverage Recapitalization Operation

Introduction Impact

Case Overview

Financial Capital Stucture

Assumptions

Analysis

Recommendations
 Introduction

Case Overview

Assumptions

Analysis

Recommendations
 Firm Valuation

Introduction

Case Overview
Adjusted Present
Value Approach
Assumptions

Analysis
D/E ratio not stable Adding debt to the
Firm
Recommendations
 Company Rating

Introduction

Case Overview

Before Operation After Operation

Assumptions

A+ BBB
Analysis

Recommendations
 Additional Assumptions

Introduction

Case Overview        
  risk premium (assume 5,5%) 5,50% 
  thirty years risk free (closest to the minimum of 15y) 8,64% 
Assumptions   Beta of industry (from Damodaran) 1,29 
  Fire Sale Devaluation of Assents 20% 
  GDP growth from table 2,73% 
  Inflation (we assumed to be equal to year 1986) 1,91% 
Analysis        

Recommendations
 Introduction

Case Overview

Assumptions

Analysis

Recommendations
 Introduction

Case Overview

Assumptions

Analysis

Recommendations