Corporate Financial Restructuring
Professor Ian Giddy
Prof. Ian Giddy
E-mail: ian.giddy@nyu.edu Web: http://giddy.org
Course Number: B40.2304.
Web site: http://www.stern.nyu.edu/~igiddy/restructuring.html
Goals
Corporate restructuring involves any substantial change in a company’s financial structure, or ownership or control, or business portfolio, designed to increase the value of the firm. This course will be taught around several major topics employing in-depth group work on case studies and deal documentation. The focus will be on identifying situations that call for nonstandard corporate finance solutions, and the design and pricing of the situation-specific financing instruments. Examples of such situations include stress-induced financial restructuring, recapitalizations, private equity and leveraged buyouts, mergers and acquisitions, and divestitures. In many cases resolving these issues will require structured finance solutions. Structured finance techniques include the design of debt, equity and hybrid financing techniques in order to resolve particular issuer or investor problems that cannot be solved by conventional methods.
Instructor
Prof. Ian Giddy is a graduate of the University of Michigan (MBA 1972, PhD 1974) and the University of the Witwatersrand (BSc 1970). He has taught finance at NYU, Columbia, Wharton, Chicago and abroad for the past twenty-five years. He was Director of International Fixed Income Research at Drexel Burnham Lambert from 1986 to 1989. He is the author or co-author of numerous articles and books, including The Handbook of International Finance, The International Money Market, Cases in International Finance, Global Financial Markets, Asset Securitization in Asia and The Hudson River Watertrail Guide.
Pedagogy
The course employs cases and problems as well as classroom lectures and discussions, and "live case studies" to offer a hands-on learning experience. We will make use of international as well as domestic examples. Each student will be expected to prepare thoroughly and to participate actively in class discussion. Material covered in the assigned readings will generally not be repeated in class. Rather, class time will be devoted to lecture and case discussion, applying the material covered in the readings.
The Course on the Internet
We will make use of the Internet for resource material and
communication. Indeed this course outline itself will evolve: the
definitive version is the Web site at www.stern.nyu.edu/~igiddy/restructuring.html
. Online quizzes may be accessed through Blackboard.
Textbook and Cases
A package of articles and case studies from HBS Publishing (see course outline)
Other recommended books:
Patrick Gaughan, Mergers, Acquisitions and Corporate Restructurings (3rd ed, Wiley)
Stuart Gilson, Creating Value Through Corporate Restructuring (Wiley Finance)
Fred Weston and Samuel Weaver, Mergers and Acquisitions (Mc Graw-Hill)
Fred Weston, Kwang Chung, Juan Siu, Takeovers, Restructuring, & Corporate Governance (2nd Ed., Prentice-Hall)
Other readings may be downloaded from the links in the course outline below. More articles and applications could be added after the course gets underway.
Grading
The course grade will be determined by the instructor based on
problem sets, written assignments and a final exam. Pop quizzes will
be given in some classes. The weighting is as follows: problem sets
15%, individual assignments 10%, group assignments 10%, pop
quizzes (best 2 of 3) 25% and final exam 40%.
Additional Resources
The Wall Street Journal and the London Financial Times provide the most comprehensive daily coverage of restructuring and financing news. Other key resources for financial restructuring include Turnarounds and Workouts magazine and the Journal of Applied Corporate Finance .
Try the following Web sites:
- eraider.com "If they won't take care of business, we will."
- mergermarket.com Global M&A activity
- Euromoney Deals and financing
- The Financier Structured finance
- ABSnet.net
- The Financial Times
- FinanceFixit.com
- and much more at Giddy's Finance Resources on the Web
Corporate Financial Restructuring
|
Date |
# |
Topics |
Readings |
Assignment |
| 9/28 |
1 |
Introduction to corporate financial restructuring |
Bowman et al, When Does Restructuring Improve Economic Value? (CMR141) |
Compare restructuring at Conseco
,
Getronics and Dynegy |
| 10/05 |
2 |
Restructuring debt and equity to create
corporate value |
DePamphilis, Ch 1 |
SAP
(please update info and hand in your analysis today) In-class group work: TDI A and B (HBS 9-291-064 & 9-294-088) debtcapacity.xls |
| 10/12 |
3 |
Restructuring debt and equity to create
corporate value |
Debt
Rating Estimation Cost of Capital Data privatecompanywacc.xls Handout 3 & Guest lecture |
TDI C and D
(HBS 9-296-035 & 9-297-085) Group hand-in: Assessing TDI exit options |
| 10/19 |
4 |
Mergers and Acquisitions: How much value added?
Who gets it? |
DePamphilis, Ch 3 & 10, AOL-TW (in Ch 1),
AMP (in Ch 3) Grading the Goldfield Poison Pill , Handout 4-5 |
Conrail
(HBS 9-298-006) Spreadsheet schirnding.xls telia-sonera.xls |
| 10/26 |
5 |
Mergers and Acquisitions: When can they work? |
DePamphilis, Ch 7 & 8 Corporate Reorganization |
Merger Negotiation (team work) Mardi-Gras Group deliverable: Deal analysis & term sheet |
| 11/2 |
6 |
Leveraged recapitalizations |
Recapitalizations
and Exchanges Handout 6 |
Sealed
Air A (HBS 9-294-122) Truck Toys and trucktoys.xls |
| 11/9 |
7 |
Leveraged buy-out financing including mezzanine
finance and high yield debt |
DePamphilis, Ch 11 Leveraged Finance Handout 7 |
Seagate
and
Le
Meridien Hotels lbocapacity.xls |
| 11/16 |
8 |
Structuring a Management Buy-out |
DePamphilis, Ch 9 Handout 8 |
John M.
Case Company (HBS 9-291-008) Group deliverable: Deal analysis & term sheet johncaselbo2.xls |
| 11/23 |
9 |
Divestitures: Why and how |
DePamphilis, pp 644-671 Handout 9 Tracking Stock |
Marriott
(HBS 9-294-090) Pinault-Printemps-Redoute breakup.xls & marriott.xls |
| 11/30 |
10 |
Bankruptcy and
restructuring |
DePamphilis, pp 671-689. Note on Bankruptcy in the USA (HBS 9-292-062) Handout 10 |
Loewen
(HBS 9-201-062) Optional: XO In-class negotiation |
| 12/7 |
11 |
Bankruptcy and restructuring |
Gilson, Valuing Companies
in Corporate Restructuring (HBS 9-201-073) Handout 11 |
Zombie,
Inc. (indiv. hand-in) Marvel (HBS 9-298-059) equityasoption.xls Equity variance data |
| 12/14 |
12 |
Course Overview &
Final Exam |
Handout
12 2-hour, open-book exam |
Sample
questions Sample Final Suggested solutions |
Copyright ©2008 Ian Giddy. All rights reserved.