Refinancing of Shanghai General Motors (A) Harvard Case Solution & Analysis

CFO of General Motors joint venture in Shanghai, Shanghai General Motors (SGM), wants to refinance almost $ 900 million in funding for the project is raised to start the procedure. The top priority is to improve the financial cost and the conditions. Several factors complicate the purpose of the financial director, including the presence of capital controls, China's imminent accession to the World Trade Organization, the captive finance subsidiary joint venture partner, and the conflicting goals joint venture partners. The case illustrates how the auxiliary financial solutions should balance at the level of the parent and the level of concern. It also shows how a multinational financial decisions - including transfer pricing, repatriation, and funding decisions - should be designed to control the problem, financial goals, as well as divergent interests of the joint venture partners. Ongoing operational and investment decisions, Shanghai General Motors agrees to early growth showing "life cycle" of finance subsidiary. The case also concerns the elements of attempts by foreign governments to regulate the capital markets, the dynamic between domestic and international banks in the fight for credit facilities of multinational subsidiaries, and as auxiliary control can achieve the most desirable financing terms. "Hide
by Mihir A. Desai, Mark F. Veblen Source: Harvard Business School 21 pages. Publication Date: July 27, 2003. Prod. #: 204031-PDF-ENG

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