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

Rockwood Specialties: High-Yield Debt Issue Case Solution

This is a Darden case study. Kohlberg Kravis and Roberts (KKR) bought the company, which this case talks about, in November 2000. The acquisition was a 1.2 Billion buyout. Following the positive market conditions, it was pondering over refinance its debt related funding to buyout during June 2003; the underwriter Merrill Lynch offered to refinance it with a $375 million issue of senior subordinated notes, in part. Although there had been a favorable interest rate environment and a strong volume of debt issuance in the first half of 2003, the Rockwood offering posed some significant challenges.

First, it was a first-time issue by a privately held company. Second, KKR's motivation for the offering and the complex financial arrangement surrounding it'd resulted in a preliminary credit rating of Caa from Moody's. Students are asked to assess and price the high-return issue. The case discusses how marketplace conditions, credit ratings, and organizational arrangement affect bond yields. There is a simple history of how the high-yield market evolved from the mid-1980s through 2003.

PUBLICATION DATE: July 07, 2004 PRODUCT #: UV0115-HCB-ENG

This is just an excerpt. This case is about FINANCE & ACCOUNTING

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