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Alibaba's Bonds Dilemma: Location, Timing, and Pricing
Emir HrnjićCase IVEY-9B17N001-EFinance, StrategyIn 2014, Alibaba—the Chinese e-commerce giant who, in September 2014, completed the largest initial public offering (IPO) in New York Stock Exchange (NYSE) history—was preparing itself for an additional round of capital fundraising. This time, Alibaba focused its efforts on a new, large bond issue. Its chief executive officer would lead Alibaba’s finance team in meetings with investors in Hong Kong, Singapore, and London to gather information abo...Starting at €8.20
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Toyota's Innovative Share Issue (2015)
Emir HrnjićCase IVEY-9B16N008-EFinance, StrategyIn June 2015, the Toyota Motor Corporation’s annual shareholders’ meeting included a proposal regarding Toyota’s new share issue. Named “Model AA” shares after the company’s first passenger car, the shares would offer investors new hybrid securities. This proposal created a lot of controversy among existing shareholders. Although President Toyoda claimed that no one would be disadvantaged by these shares, it remained unclear how many shareholders...Starting at €8.20
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Alibaba's IPO Dilemma: Hong Kong or New York
Emir HrnjićCase IVEY-9B14N035-EEntrepreneurship, Finance, StrategyIn April 2014, Alibaba’s impending initial public offering (IPO) projected to be among the world’s largest IPOs. Alibaba faced many choices regarding ownership structure, trading location, IPO pricing and IPO timing. The Hong Kong Stock Exchange seemed like a natural fit for its IPO due to geographical, cultural and language proximity. Furthermore, 86.7 per cent of Alibaba’s revenues originated within China. However, Alibaba insisted on “partners...Starting at €8.20
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Singapore Airlines: A Rights Issue during the COVID-19 Crisis
Emir HrnjićCase IVEY-W24460-EFinanceIn early 2020, Singapore Airlines Limited (Singapore Airlines) faced severe liquidity issues as the global pandemic halted its flights and uncertainty loomed. Erstwhile massive cash reserves were quickly running out, and the airline’s executives pondered how to save the company from insolvency. Singapore Airlines’ majority shareholder, Temasek Holdings Limited, agreed to subscribe to a massive capital-raising exercise of up to S$15 billion via a ...Starting at €8.20
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Suntech Power: Competition and Financing in China's Solar Industry
Emir HrnjićCase IVEY-9B15N019-EFinance, StrategyIn 2011, Suntech Power, the world’s largest solar panel manufacturer, found itself in a highly problematic position. Recent developments in the Chinese solar power industry had negatively impacted the company’s operations. As the industry had matured, the demand for Suntech Power’s products had become highly volatile. Changing policy regulations, the ambiguous financial structure of the firm and a shift in consumers’ perceptions of the product we...Starting at €8.20
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Temasek's Offer to Buy Olam International
Emir HrnjićCase IVEY-9B14N036-EEntrepreneurship, Finance, StrategyOlam International, a publicly listed firm, was a leading agri-business with an integrated supply chain. To sustain growth, the company took on large amounts of debt to fund acquisitions and other capital expenditures. A hedge fund issued a Sell recommendation, highlighting the problems facing the company, including several years of negative free cash flows. The heated exchange between Olam and the hedge fund led to a government investment fund, ...Starting at €8.20
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Singapore Airlines Limited: Dividends
Emir Hrnjić; David ReebCase IVEY-9B18N018-EFinance, StrategyA new analyst has been asked to forecast the upcoming dividends for Singapore Airlines Limited. However, unlike most dividend-paying firms, which typically maintain stable, transparent, and simple dividend policies, Singapore Airlines maintained an opaque, complex, and irregular pattern of dividends. Further, the company did not respond to requests for information about expected dividends or the company's dividend policy. The analyst decided to g...Starting at €8.20
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Emirates Airline: A Billion-dollar Sukuk-Bond Issue
Emir Hrnjić; Harun Kapetanović; David ReebCase IVEY-9B14N002-EFinance, StrategyEmirates Airline (EA) needs to fund the purchase of 30 new A380 aircraft. On March 11, 2013, EA announced plans to issue US$1 billion of Islamic bonds (sukuk) and $750 million of regular bonds. These bonds arguably share similar risks and seniority even though the sukuk bonds sold with a lower implied yield. This difference in pricing for securities with similar default risks seems at odds with conventional finance thinking. Against this backdrop...Starting at €8.20
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Suit Wars: Men's Wearhouse versus Jos. A. Bank
Emir HrnjićCase IVEY-9B15N001-EFinanceOn October 9, 2013, Jos. A. Bank Clothiers Inc., a large U.S. retailer of men's tailored and casual clothing, footwear and accessories, made a hostile offer to buy its larger rival Men’s Wearhouse. The latter made a counter-offer on January 6, 2014 in what is known as a Pac-man defence — the prey turned predator. Jos. A. Bank responded by adopting a poison pill, announcing the planned acquisition of Eddie Bauer, an outdoor apparel retailer. What ...Starting at €8.20
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Financing Alibaba's Buyout: Syndicated Loan in Asia
Emir HrnjićCase IVEY-9B14N011-EFinance, StrategyAlibaba is the world’s largest online trading platform, with higher revenues than Amazon and eBay combined. Its 2012 syndicated loan was the first sizable loan for a Chinese technology company with few tangible assets. Creative loan covenants stated that the subsidiaries would repatriate 100 per cent of the distributable profits for debt service. The loan was partially used for the buyback of Yahoo!’s stake in Alibaba. In the agreement, Yahoo! wo...Starting at €8.20