Toyota’s Innovative Share Issue (2015) Harvard Case Solution & Analysis

In June 2015, annual shareholders meeting that is ’ comprised a suggestion regarding Toyota’s new share issue are ’sed by the Toyota Motor Corporation. Named “Model AA” shares after the company’s first passenger car, the shares would offer investors new hybrid securities. This proposal created a lot of controversy among existing stockholders. Even though the President of Toyoda said that no one would be disregarded by these shares, it remained blur how many shareholders had assurance in this assurance. The share issue, which would substantially comprise up to 5 per cent of the Toyota’s total outstanding shares, would retain the support of a two thirds majority of shareholders.

The new shares looked like ordinary shares with a “lock up” period or preferred shares with voting rights. It was time to vote on the acceptance of Toyota’s new share issue, but the subsequent questions lingered in the shareholders’ heads: What exactly was the difference between Model AA shares and ordinary shares? What was the difference between Model AA shares and bonds (or convertible bonds)? Eventually, if the vote was approved should Model AA shares be priced?

Learning Objective: This case was fashioned on the subject of raising capital via revolutionary share issues for a course in corporate finance. Named “Model AA,” this share dilemma exemplifies a hybrid securities problem — a blend of a five-year convertible bond issue and an ordinary share problem (with a “lock-up” interval). The case includes the pricing of AA shares.

Toyota's Innovative Share Issue (2015) Case Study Solution

Publication Date: 06/27/2016

This is just an excerpt. This case is about Finance

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