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1 Merit Enterprise Corp Case Study

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Arun Ab
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55 views1 page

1 Merit Enterprise Corp Case Study

Do

Uploaded by

Arun Ab
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Petter cotta meaciakd 1 Merit Enterprise Corp. se Ion, chit financial officer of Merit Enterptie Comp was rev 8 hee sentation one lst ie before her upvomiag meeting wih he board of direc~ eet pusiness had been brisk for che last wo years, and he ‘company’s CEO og fora dramatic expansion of Mesis production capaci: SXSSO08 the ere Slane would regi $4 billion in capital in addition to billion in excess op chat ee firm had bulle up. Sara's immeite tsk was t0 ‘brief the board on ‘pions for raising the needed $4 billion. eae ee rane companies ba tae, Merit had maintained is sara a5 2 PUTTS compan Enancing ie growth by reinvesting profits and, when Dee, borrowing company Seehes Meri cool follow shat same srtegy co ras $4 billion Fron tp expand st the pace envisioned by the i's GEO was mest though arse pale to Sara. She had identified two options fo tbe board to consides: ‘Setion ts Mert could approach JPMorgan Cate « bane shar had served Met wel ee ay yeacs with deasona redline a well as medion foans. Lehn esa that JPMorgan was ualikely to make a $4 billion Joos te ‘Merion its ow, aera probably eather a group of banks together co me © Joan of this mage a Foweves che banks would wndoubeedly demand tas 0° limi further bor ae aiand provide JPMorgan with periodic financial duciosss s° that they could sores Mries financial condition as ie expanded its operations Spt 2+ Mert ould convert co public ownership, si stock to the public sn the pimary racket. With Mecis excellens inane) performance in recent Yeats ‘Sasa thought chat its stock could command rice in the sacket and chat many aay Soul want to parsipete in any stock offering st Merit conducted. oe mag. public compaay would aso allow Mert forthe first time, 10 offer employees compensation i the fren of stock oF rock options, thereby exeating stronger incentives for employees to help he fest Sueceed. On the othes hand, Saxe sone public eompanis faced extensive disclosure reqneser ‘and other regu Krioas tet Mert bad never hed 10 confronr as a Paves fiem. Purthermore, with ee trading in tbe secondary masket, who kes what Ikind of individuals ot insti- eins might wind wp holding @ lange chunk of Ment seock? TODO ‘a Dieuss the pros and cons of option 1, and prions ne thonghts. What are the tine apecs ofthis pion and what are he DIGEST acawbacks? ‘p, Do the same for option 2. &. ihe option do yow hin Sara should zecomimend to the board and why?

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