Hexcel Corporation Harvard Case Solution & Analysis

At the end of the third quarter, in September 2002, the main office of the executive and finance director Hexcel Corporation is considering a private offering of convertible preferred shares of stock for $ 125 million. After the economic recession and the terrorist attacks of September 11, 2001, the company has seen a serious decline in the industry they service - Hexcel is a leading manufacturer of composite materials, reinforcements and structures for commercial aviation, defense, and electronics. It is difficult external environment caused a decline of 16.4 percent in the year prior to the date of receipt and the company was forced to revise their agreements bank covenant. While the company said the restructuring of a major effort to cut $ 60 million in expenses, CEO and CFO have to find the money to pay $ 227 million over the next two years. With a leverage of 6.3 times debt to EBITDA and recent lowering their bonds to Saha, the company is moving to a crisis in funding. Hexcel management to consider several options, such as more debt, asset sales and the three types of capital (initial public offering, strategic investors and private equity). They narrowed the ability of the private placement and to assess the price and the overall feasibility of the proposed transaction. This case is designed for students to determine the value of securities in the disaster. Students will see an alternative management team conducted an assessment, and in particular to look at the details of a private offering of shares. "Hide
by Vasily A. Kalymon, Jordan Mitchell Source: Richard Ivey School of Business Foundation 29 pages. Publication Date: May 30, 2005. Prod. #: 905N03-PDF-ENG

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