Info Cao
Source Standard amp Poor's, Bond Guide, and CreditWeek. Note Price represents percent of par YTM represents the yield-to-maturity. All prices indicated are approximate bid prices. EXHIBIT 4.19 Dillon Read's Valuation Grid for Flagstar's Senior Subordinated Debt as of Early March 1997 Smillions EBITDA 1996 actual Possible multiples Enterprise values per different multiples Less senior debt Available for all subordinated debt and Face value of senior subordinated debt Residual value as of face...
Info Ogx
Total liabilities and stockholders' equity Casewriter Note The financial statements presented in Exhibit 8.6 are taken from the USX Corporation shareholder proxy statement dated April 10, 1991. These statements therefore reflect additional analysis that the company did after the case decision date.
Reevaluating Humanas Integrated Strategy
From the beginning the new strategy had worked extremely well. However, in conducting its internal review of Humana's strategy in late 1991, management identified a number of disturbing recent trends, particularly in the hospitals segment. In addition, the long-term prospects of the firm's two businesses were growing increasingly divergent, causing some to question whether an integrated strategy was still appropriate. On the one hand, the long-term outlook for managed care providers like HMOs...
The Loewen Group Inc
Whatever you do, always save six for pallbearers. On January 22, 1999, John Lacey, a renowned turnaround specialist, was appointed chairman of the Loewen Group Inc., the second largest death care company in North America. Headquartered in Burnaby, British Columbia, Loewen owned over 1,100 funeral homes and more than 400 cemeteries in the United States and Canada it also owned 32 funeral homes in the United Kingdom. The company had come a long way since its modest beginnings in Canada, where Ray...
Info Hgs
The above companies respresent all 14 publicly traded, predominantly restaurant companies that both DLJ and Jefferies regarded as comparable to one or more of the restaurant chains that Flagstar owned. None of the above companies had any material amount of preferred stock. The time period used for the calculation of betas and total returns is approximately five years. Sources Company 10-Ks and 10-Qs Bloomberg. EXHIBIT 4.18 Flagstar's Unsecured, Publicly Traded Debt Changes in Market Value as...
Scis Hostile Takeover Offer
Described in the news media as fierce competitors and arch rivals, Loewen Group and SCI increasingly found themselves competing for properties in the same markets. In 1994, the two companies collided in the United Kingdom, where both sought to acquire the large British funeral company, Great Southern Group. SCI ultimately prevailed, paying almost 200 million.20 During 1996 SCI had made several informal acquisition proposals to Loewen, but all were declined. On September 17, 1996 the very day...
PREPACKAGING ft CHAPTER 11
In early December 1996 Flagstar began discussions with the investment banking firm Donaldson, Lufkin amp Jenrette about possible restructurings, and DLJ submitted an initial restructuring proposal to Flagstar on December 23. It involved pursuing a prepackaged Chapter 11 bankruptcy reorganization. In a prepackaged Chapter 11, or prepack, the firm simultaneously files for bankruptcy and files a reorganization plan with the court. The requirements for voting on and confirming a prepack Chapter 11...
LufthansaDavis
On September 16, a fourth bidder emerged for the company. The German airline Deutsche Lufthansa AG and the California investor Marvin Davis jointly offered to buy or place 100 million of common stock and 300 million of debt in Continental Holdings, matching the previous offer by Air Canada Air Partners. Davis had recently tried unsuccessfully to acquire two other major airlines, Northwest and United. Lufthansa was one of the leading European carriers with 9 billion in annual revenues and had a...
Info Qpx
Low 5.2 Average excludes high and low. Low 3.9 Average excludes high and low. Market segment generally Low growth prospects. operations market share leader. Below-average ranking in food quality and service. Low growth prospects dominant players McDonald's, Burger King, Wendy's continue to open net sites aggressively. 5.0-5.5 Hardee's specifically Good locations. As franchisee, suffering from franchisor mismanagement brand somewhat weak same-store sales declines. Long-term decline in family...
History Of Alphatec Electronics And The Alphatec Croup
Born to a middle-class ethnic Chinese family in Bangkok, Thailand see Exhibit 5.1 for a map of Thailand , Charn Uswachoke graduated from North Texas University. After graduating, he joined Honeywell in the United States, and soon returned to Thailand to work for a division of the company. Thailand's economy was booming, and Charn wanted to set out on his own. When Philips Electronics N.V. decided to sell a portion of an integrated circuit IC packaging plant, Charn borrowed money to make the...
Humana Inc Post Spin Capital Structure
In late June of 1992, David Jones chairman and chief executive officer CEO of Humana Inc. stood looking out the window of his downtown Louisville, Kentucky, office and considered how rapidly events had unfolded over the past year. As the nation's largest integrated health care provider, Humana operated eighty-one acute-care hospitals in nineteen U.S. states, England, and Switzerland, and offered a broad range of managed health care plans to approximately 1.7 million individuals, mainly through...
OLJs Valuation on Behalf of the Company
DLJ based its valuation primarily on a comparable companies analysis. It did not use a discounted cash flow analysis as a formal valuation technique because of what it saw as the significant uncertainty of Flagstar's future cash flows. DLJ believed this would be particularly problematic for cash flows several years out, which would serve as the basis for a terminal or exit value. Comparable companies analysis was better, it said, because it incorporated current market assessment of similar...
Estimating Flagstars Enterprise Value
Estimating the enterprise value of the reorganized company was critical because it would determine how much the company's various claimants would recover. In fact, Flagstar's valuation as a reorganized entity became an extremely contentious issue, and specific details of it became the subject of heated questioning in bankruptcy court proceedings in the summer of 1997. Both Flagstar and the junior sub debt holders had outside financial advisors do formal valuations of company. Flagstar had this...
Participants In The Reorganization
Pete Van Horn knew that each class of claimants would examine the projections with a microscope to anticipate the effect they would have on the nature of the offer that would be made to each class. In his mind, there were four principal classes.3 1. Secured Claims. These included claims secured by a range of assets, including real estate and inventories. While the particular security of each claim was often different, Van Horn thought that as a first approximation it was possible to treat these...
Executive Compensation
Junior creditors also objected to senior management's compensation, which they regarded as excessive. They noted that in 1997, the year the company commenced this bankruptcy proceeding, wage increases for eight members of the management committee averaged over 14 , with certain members receiving pay increases of up to 24 . They also noted that the company had paid CEO Adamson a retention bonus of 1.5 million in January 1997 and agreed to pay him retention bonuses of 2 million and 3 million in...
Legal Releases
Another provision of the plan that junior creditors found highly objectionable was the granting of broad legal releases to officers, directors, shareholders, attorneys, members of the ad hoc creditors committees, bond indenture trustees, and other parties in interest. The only actions not covered by these releases were those based on willful misconduct or gross negligence. Flagstar's lawyers argued that these releases were an essential part of the plan. Since Flagstar fully indemnified its...
Jefleries Valuation on Behalt of the Junior Creditors
Jefferies based its valuation primarily on a discounted cash flow analysis summarized in Exhibit 4.15 . Jefferies' analysis incorporated some key aspects of the company's financial projections summarized in Exhibit 4.8 , such as projected EBITDA for the restaurant divisions, and total revenues. Jefferies' projections differed from the company's in certain other Jefferies claimed that Flagstar's total enterprise value was 2,317 million. It disagreed with DLJ's approach to valuing Flagstar,...
Introduction
On a hot summer day in 1992, V.H. Pete Van Horn, president and chief executive officer CEO of National Convenience Stores NCS , was chairing a meeting with representatives of the company's creditors. The company had been operating under Chapter 11 of the Bankruptcy Code since December 9, 1991. Van Horn and his management group were explaining to the creditors that each day they were in bankruptcy they were losing opportunities. He reminded them that NCS had to greatly downsize its store...
PreNeed Business
During the 1990s, pre-need sales of funeral services and cemetery plots had come to represent an increasing share of the death care business. The segment of the population that was most likely to buy on a pre-need basis people who were now in their 50s and 60s was rapidly expanding. From the companies' perspective, pre-need sales provided a way to lock in sales growth and market share. Companies also could earn an investment return on monies that were paid to them in advance, and held in an...
Financial Distress
Loewen continued its aggressive growth strategy in 1997, acquiring 138 funeral homes, 171 cemeteries, and an insurance company, paying a total of 546 million. The year also marked the company's entry into the United Kingdom, where it acquired thirty two funeral homes. Debt again played an important role in financing this growth, and for the full year, interest expense on long-term debt was 132 million, up from 93 million in 1996. Loewen's businesses, however, performed less well than expected....