Hutchinson Whampoa limited: the capital structure decision
30017 Corporate Finance
Hannes Wagner
The included PDF files are examples of case study write-ups made by students of the 30017
Corporate Finance course in 2012-2013. The underlying case was “Hutchison Whampoa Limited: The
Capital Structure Decision”. The write-ups were evaluated as “excellent” and the students have agreed for their work to be distributed. All rights to their work remain with them.
The instructions that students received were the following:
“Your assignment is to provide a written analysis of the case. We will discuss the case in class as indicated in the syllabus. All team members should be knowledgeable about the facts of the assigned case. While dealing with the decision problem at hand, your report should address the following questions:
1. Assume Hutchison Whampoa will require US$ 1 billion of financing in 1996. Also assume that new equity can be raised at $48.8 a share and that a long-term debt issue will carry an interest cost of HIBOR plus 70 basis points (bps). How would an equity or debt issue impact on Hutchison’s financial position and performance?
2. Assess Hutchison Whampoa’s current capital structure in light of its future financing needs.
3. What bond rating do you think Hutchison Whampoa will be able to obtain from S&P?
4. Compare the debt financing options. Explain why you are for/against the Yankee bond option. 5. What kind of capital structure would you propose to Hutchison Whampoa and why?”
Group name: $Wagner
Balzola, Guglielmo (1607498) – class 17; Borsos, Robin (1564970) – class 17; Jakab, Tamas
(1579747) – class 18; Pallotta, Matteo (1562016) – class 16; Ragini, Raffaele (1570472) – class 18
HUTCHISON WHAMPOA CASE
GROUP REPORT
EXECUTIVE SUMMARY
After careful analysis, the finance department of Hutchison Whampoa Limited (HWL) compared two proposed financing options: USD 1 billion equity issuance and the equivalent debt issuance. In light of its current capital structure and the expected BBB rating, we propose that the
Hannes Wagner
The included PDF files are examples of case study write-ups made by students of the 30017
Corporate Finance course in 2012-2013. The underlying case was “Hutchison Whampoa Limited: The
Capital Structure Decision”. The write-ups were evaluated as “excellent” and the students have agreed for their work to be distributed. All rights to their work remain with them.
The instructions that students received were the following:
“Your assignment is to provide a written analysis of the case. We will discuss the case in class as indicated in the syllabus. All team members should be knowledgeable about the facts of the assigned case. While dealing with the decision problem at hand, your report should address the following questions:
1. Assume Hutchison Whampoa will require US$ 1 billion of financing in 1996. Also assume that new equity can be raised at $48.8 a share and that a long-term debt issue will carry an interest cost of HIBOR plus 70 basis points (bps). How would an equity or debt issue impact on Hutchison’s financial position and performance?
2. Assess Hutchison Whampoa’s current capital structure in light of its future financing needs.
3. What bond rating do you think Hutchison Whampoa will be able to obtain from S&P?
4. Compare the debt financing options. Explain why you are for/against the Yankee bond option. 5. What kind of capital structure would you propose to Hutchison Whampoa and why?”
Group name: $Wagner
Balzola, Guglielmo (1607498) – class 17; Borsos, Robin (1564970) – class 17; Jakab, Tamas
(1579747) – class 18; Pallotta, Matteo (1562016) – class 16; Ragini, Raffaele (1570472) – class 18
HUTCHISON WHAMPOA CASE
GROUP REPORT
EXECUTIVE SUMMARY
After careful analysis, the finance department of Hutchison Whampoa Limited (HWL) compared two proposed financing options: USD 1 billion equity issuance and the equivalent debt issuance. In light of its current capital structure and the expected BBB rating, we propose that the