After the BP / Amoco merger in December 1998, Chief Financial Officer David Watson said Bill Young to recommend when and under what circumstances the firm should use the external financing of the project, rather than internal corporate funds to finance new investments. As part of this activity, young and his team must review the current policy of each company in the financing of projects and evaluate the various studies used to justify its use. Following this review, the team created a new policy statement recommends BP Amoco finance capital expenditures using corporate funds, with the exception of three special circumstances: mega-projects, projects in politically unstable regions, as well as joint ventures with heterogeneous partners. If the general rules for the use of corporate funds and whether the specific exceptions to this rule are appropriate for the merged entity are the subjects for discussion in the classroom. "Hide
by Benjamin C. Esty, Michael Kane Source: Harvard Business School 19 pages. Publication Date: 09 January 2001. Prod. # 201 054-PDF-ENG
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