Rockwood Specialties: High-Yield Debt Issue Harvard Case Solution & Analysis

In November 2000, Kohlberg, Kravis and Roberts (KKR) acquired Rockwood Specialties, Inc, company, specialty chemicals, a $ 1.2 billion buyout. Inspired by the favorable market conditions in the first half of 2003, KKR thinking of refinancing debt redemption in June 2003. Merrill Lynch, the underwriter of its proposed financing to refinance earlier, in particular, with a $ 375 million issue of senior subordinated notes. Although there have been favorable interest rates and a strong volume of debt in the first half of 2003, Rockwood proposal still have some serious problems. First, it was the first time a private company issue. Second, the motivation for placing KKR and complex financial structure surrounding it resulted in a preliminary credit rating of Caa by Moody `s. Students were asked to estimate the high-price issue. The case is considered as credit ratings, market conditions, and organizational structure affects the yield of the bonds. There is a brief history of how the high-yield market has evolved from the mid-1980s until 2003.
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by Susan Chaplinsky, Kevin Kim Source: Darden School of Business 23 pages. Publication Date: July 7, 2004. Prod. #: UV0115-PDF-ENG

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