tailieunhanh - The Walt Disney Company’s Yen Financing Case

The Walt Disney Company, Areas of Operations, Main Problem, Yen Bullet Loan, ECU/Yen SWAP with French Utility As the main contents of the lecture "The Walt Disney Company’s Yen Financing Case". Invite you to consult the lecture content to capture detailed information. | The Walt Disney Company’s Yen Financing Case Team 10 Steven Lambe Fred Patet Petr Khalfen Yunyun Xu Ashmita Srivastava The Walt Disney Company Areas of Operations Movies Music Disneyland Theme Parks Resorts Recreational facilities Restaurants Hotels Games Consumer Products; etc. Financial Overview (1984) Financial development Total Assets & Borrowings Financial Overview (1984) Main Problem Reasons for Hedging Expected Growth in Yen Royalties Yen depreication to protect against the currency fluctuation Reduced the currency risk to got the 10-20% expected growth 8 Hedging method Advantages Disadvantages Options Flexibility Low transaction cost Leverage Short Term Hedge Up-Front premium Futures Standardized contracts High liquidity Low Transaction cost Short Term Hedge Difficult to customize Initial Margin Forwards Long Term Hedge Negotiable size No Initial Margin Limits upside potential High Bid Ask spread Counterparty Risk Term Loan Spot exchange rate Long Term Hedge High Leverage Balloon payment at the end High Debt Expensive Swap Long Term Hedging Flexibility Off Balance Sheet Transaction No upside potential Low Market Liquidity Counterparty Risk Hedging method Recommendation Reason Options Not Recommended Doesn’t provide long term hedge Futures Not Recommended Doesn’t provide long term hedge Forwards Not Recommended Bank requires Term Loan Recommended Disney can borrow ¥ 15 billion Swap Recommended Disney can swap ECU Yen Bullet Loan IRR= 1. ECU 80 million ten-year Eurobonds at of par, coupon, 2% underwriting fees. 2. ECU/¥ swap intermediated by Industrial Bank of Japan (IBJ) 3. French state-owned utility interested in swapping yen debt for ECU debt Goldman Sachs’ Proposal ECU/Yen SWAP with French Utility IRR= Conclusion & Recommendation Why ECU Yen/ Swap? 1. Cost reduction of from Yen Loan with IRR = to ECU/YEN Swap with IRR = makes a total of ECU 400,000 3. Cost reduction of from ECU Loan with IRR = to ECU/YEN Swap with IRR = . 4. Goldman gets a Single payment of Million ECU (2% Fees) 18 The Walt Disney Co. Accepted Goldman Sachs Proposal with ECU/Yen swap. It was followed by a second ECU note offering in December 1985. Disney began engaging in more foreign currency swaps in order to take advantage of attractive borrowing rates. What actually happened- QUESTIONS ? | The Walt Disney Company’s Yen Financing Case Team 10 Steven Lambe Fred Patet Petr Khalfen Yunyun Xu Ashmita Srivastava The Walt Disney Company Areas of Operations Movies Music Disneyland Theme Parks Resorts Recreational facilities Restaurants Hotels Games Consumer Products; etc. Financial Overview (1984) Financial development Total Assets & Borrowings Financial Overview (1984) Main Problem Reasons for Hedging Expected Growth in Yen Royalties Yen depreication to protect against the currency fluctuation Reduced the currency risk to got the 10-20% expected growth 8 Hedging method Advantages Disadvantages Options Flexibility Low transaction cost Leverage Short Term Hedge Up-Front premium Futures Standardized contracts High liquidity Low Transaction cost Short Term Hedge Difficult to customize Initial Margin Forwards Long Term Hedge Negotiable size No Initial Margin Limits upside potential High Bid Ask spread Counterparty Risk Term Loan Spot exchange rate Long Term Hedge High Leverage .

• Ngân hàng - Tín dụng
• Walt Disney Company’s Yen
• Yen Financing Case
• The Walt Disney Company
• Areas of Operations
• Main Problem
• Yen Bullet Loan