Financing PPL Corp.s Growth Strategy Harvard Case Solution & Analysis

PPL Corp, electric utilities in Pennsylvania, you need to finance $ 1 billion exacerbation plants as part of its new growth strategy. In February 2001, Chief Financial Officer Steve May PPL Global Division, is responsible for recommending a financial plan. After considering all the options, May decides that synthetic lease best option, but he has to decide whether to recommend a traditional or limited recourse synthetic lease and how to structure specific conditions. Limited synthetic lease, as opposed to the traditional structure requires fewer corporate guarantee on the assets and has more on the credit-treatment, which is important in view of the company's growth strategy and the limited availability of debt. However, to find investors willing to take more risks to the project will cost more and take longer. Timing is an issue for May, because if it does not close the funding over the next two months, PPL will lose a valuable opportunity to purchase turbines for peak plants. Failure to exercise the option could delay construction by the schedule, the PPL wants to avoid this nationwide race to build new generating stations. "Hide
by Benjamin C. Esty, Carrie Ferman Source: Harvard Business School 25 pages. Publication Date: December 17, 2001. Prod. #: 202045-PDF-ENG

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