...Harvard Business School 9-297-005 Rev. October 18, 1996 D O Private Equity Investment in Russia: Alliance Cellulose Limited N In April, 1995, portfolio managers were reassessing the investment climate in Russia. Since the disintegration of Communism and the Soviet Union in 1991, western investors had been intrigued by the potentially huge returns that could be gained by participating in the restructuring of the Russian economy. Russia’s transformation to a market system, however, had been highlighted by missteps and disappointments. Foreign investors who had jumped into the market only eight months earlier were burned badly by a general market collapse in October. Furthermore, Russia’s political and economic future were uncertain. O Nevertheless, Russia possessed many attractive features that could reward those with the courage to invest at this early stage of market development. Russia’s natural resources accounted for significant portions of the world’s proven oil and gas, timber, coal, and minerals reserves. In addition, the privatization process, lack of internal capital, and country-specific risk resulted in valuations for Russian companies that seemed to be small fractions of their world peers. T Russia in 1995 was frequently compared to America’s “Wild West,” when the search for riches and general lawlessness combined to create very volatile conditions. While western money managers were drawn to Russia by tantalizing asset valuations...
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...Products is a leading manufacturer and distributor of quality paper products especially envelopes with its position further strengthened with its recent acquisition of Envelope Makers. This company has good stable growth with no gearing and potential cost synergies between Envelope Products and Envelope Makers operations. It is recommended to purchase the entire shares of this company as a going concern rather than net assets at a value of $48m with 35% equity stake and geared at 60%. Management will receive 5% equity stake with 10% ratchet on exit. The investment horizon is expected to be 5 years with IRR target of 35%. The exit strategy is to increase the earnings capacity of the company through cost savings from the synergies and increase in market share by actively marketing of its new value-added products and growth opportunities in the development of new technologies, with the intention to sell the business either through trade sale to its natural owners or secondary private equity investments. Investment Thesis The investment proposition is to improve the quality of earnings by consolidating and creating synergies between Envelope Australia and Envelope Makers and pursue other growth opportunities in value-added products such as the open and reusable products. Growth in earnings through: • Increase in earnings through further integration and consolidation of Envelope Makers which includes merging of offices in most states where there are 2 locations • Development and...
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...firm, limited liability partnership or a company or any other form of business organization which the participating firms choose to select. It generally has the following characteristics: * Right of mutual control or management of the enterprise. * Right to share in the property. * Joint property interest in the subject matter of the venture. * Contribution by partners of money, property, effort, knowledge, skill or other assets to the common undertaking b. Consistent with U.S. GAAP, Abbott uses the equity method to account for its joint venture in TAP Pharmaceutical Products (TAP). Briefly explain this accounting method. An accounting technique used by firms to assess the profits earned by their investments in other companies. The firm reports the income earned on the investment on its income statement and the reported value is based on the firm's share of the company assets. The reported profit is proportional to the size of the equity investment. This is the standard technique used when one company has significant influence over another. International...
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...Chapter 1: The Equity Method of Accounting for Investments 1. There are three ways that a company may account for its investments in other companies. The method of accounting is determined by the degree of influence or control that the investor has over the investee: Criterion Ownership Level Accounting Method Inability to significantly influence Less than 20% Fair value or cost Ability to significantly influence 20% - 50% Equity method or fair value Control (through voting power) More than 50% Consolidated financial statements Control (through variable interests) Primary beneficiary status (no ownership required) Consolidated financial statements 2. The Fair-Value method is used for all equity investments in which the investor does not have the ability to significantly influence the investee. These investments are recorded at cost and periodically adjusted to fair value (i.e., market values). The basic principles are: 1) initial investments in equities are recorded at cost and subsequently adjusted to fair value if fair value is readily determinable; otherwise, the investment remains at cost. 2) equity securities held for sale in the short term are classified as trading securities and reported at fair value, with unrealized gains and losses included in earnings. 3) equity securities not classified as trading securities are classified as available for sale securities and reported at fair value, with unrealized gains and losses excluded from earnings and reported...
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...Changed from |0.1 to |-0.5 EPS (FY13E)........................................................................................................Unchanged RATING...............................................................................................................Unchanged Net losses lower than expected… GMR Infrastructure’s (GMR) Q2FY12 net losses were lower than expected largely on account of better-than-expected revenues and margin in the other segment (investment income, project management fees & charter rental income). During the quarter, GMR agreed to sell a 30% stake in GMR Energy (Singapore) implying deal value of ~S$50 million and contributing |1.7/share in our SOTP valuation. We maintain BUY. Q2FY12 losses lower than expected… GMR’s net sales grew 48.3% in Q2FY12 mainly on account of consolidation of the Male Airport (| 225 crore). The net losses came lower at | 62.5 crore vs. our expectation of | 91.1 crore largely on account of higher revenues and EBIT margin in the other segment (includes investment income, project management fees & charter rental income). The others division revenues grew 56.2% sequentially at |190 crore with the EBIT margin of 77.2% in Q2FY12 (38.4% in Q1FY12). AERA, gas allocation uncertainty remains… The company has raised bridge loan to account for funding shortage due to...
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...Jun.25th 2014 Background Timken Company Overview Founded in 1898 by Henry Timken and incorporated in 1904, The Timken Company (“Timken” or “the company”), is headquartered in Canton, Ohio. Timken is the largest manufacturer of tapered roller bearings and alloy seamless mechanical steel tubing in the United States and a leading global manufacturer of highly-engineered bearings, alloy and specialty steels, and a provider of related products and services. Timken is the largest North American-based bearings manufacturer. The company has operations in 29 countries on six continents. As of December 31, 2005, Timken employed approximately 27,000 people. On February 18, 2003, Timken completed the acquisition of The Torrington Company (Torrington), a manufacturer of needle bearings used in transmission and wheel applications. Torrington is now integrated into the company, and has added tremendous scale to Timken’s operations. Torrington Company Overview Founded in 1866 as Excelsior Needle Company, a maker of sewing-machine needles, The Torrington Company was an old-line industrial firm. Torrington operated its business in two segments that were familiar to Timken: automotive and industrial. Sales were approximately equal across the two segments. The OEM business focused on higher-margin niche products. Torrington’s 2002 sales were split as follows: 73% in North America, 17% in Europe, and 10% elsewhere. The company employed 10,500 workers at 27 plants worldwide, and served...
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...Unit 2 Term Paper Gary M. Kidd Kaplan University Author Note Pro. Young-White, I’m sorry the term paper is a day late, but I spent most of 3 September at a scheduled medical procedure to refill the pain pump implanted in my spine with Dilaudid. It kept me knocked-out most of the day. Please remember that I’m given extra time on assignments via the Kaplan University office of student disabilities. Abstract This term paper for unit two review three articles, Ethics Consultation in United States Hospitals This term paper also defines 8 financial terms. Keywords: Balance sheet, Shareholder Equity, EBITDA, EBITDAM, Financial Ethics, Financial Benchmarking, Financial Trend Analysis, and Ratio Analysis. Unit 2 Term Paper Business ethics is the appropriate business guidelines and customs regarding debatable issues, like the way a CEO runs his company, illegal stock trading, corruption, business social and monetary obligations. The government’s authorities frequently enforce business ethics, still there are times when businesses alone will use a straightforward structure that organizations can abide by so that they simply may benefit the public interest (investopedia.com, 2013). Article Review The first article chosen for this assignment, is Betsy Gallup’s article Ethics Are an Important Part of Running a Health-Care Facility, and she explains ethics as having three components: independence, integrity and objectivity (2009)...
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...Running Head: Financing Alternatives Lester Electronics Financing Alternative Benchmarking for Bernard Lester University of Phoenix MBA – 540 Introduction In this paper will compare and contrast issues that various companies had experienced in past mergers to the issues presented in the Lester Electronic Scenario. The companies benchmarked are Disney-Pixar, Lucent-Alcatel, Monaco Coach Corporation, SMC Corporation, Infosmart-Cyber Merchants, Fidelity Bank of Nassau, Royal Bank of Canada, and AT&T. One of the issues presented in the scenario is that LEI was preparing to conduct a joint venture with Shang-wa when Transnational Electronics made an offer to acquire Shang-wa. The main issue is that if Shang-wa is acquired by TEC, the joint venture between Shang-wa and LEI will not be possible. LEI intends to remain as the company of choice but this might not be possible if TEC acquires Shang-wa. Some of the concepts that Team A will evaluate considering the LEI scenario issues are: capital management strategies to maximize shareholder wealth, economic exposure, the challenges of cross-border growth strategies, working capital management, and internal and external growth strategies, and cultural barriers, while identify the best financing alternative for the merger. Companies Benchmarked Alcatel-Lucent – Yolanda Smothers Alcatel-Lucent provides telecommunications...
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...& Vickovich, chapter 7, Essential cases Latec Investments Ltd v Hotel Terrigal Pty Ltd (1965) 113 CLR 265 Heid v Reliance Finance Corp Pty Ltd (1983) 154 CLR 326 Moffett v Dillon [1992] 2 VR 480 What is priority? Where two or more parties have valid but competing interests in the same property, the dispute is a priority dispute. Different rules apply to resolve priority disputes depending upon the nature of each party’s proprietary interests in the property. Factors relevant to the resolution of these disputes include: * which of the competing rights arose first in time; * whether the holder of the rights arising later in time was aware of any prior interests; * the conduct of the holder of the earlier interest. The rules for determining priority of interests should be studied in conjunction with Module 2 in this course and should also be considered in relation to competing assignments of equitable interests in the course on Trusts. The priority rules Competing legal interests The general rule for determining priority between competing legal interests is that priority is given to the one created first in time. Competing priority of company charges is determined by the Corporations Act 2001 (Cth). Competing equitable interests The general rule Where the competing interests are equitable, the general rule is that if the equities are equal, the first in time will prevail. Latec Investments Ltd v Hotel Terrigal Pty Ltd (1965) 113 CLR 265 Wu v Glaros...
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...Evidence from Canadian and U.S. Firms Kelly E. Carter SYNOPSIS: I examine Sarbanes-Oxley’s (SOX) effect on capital structure. I find that SOX is associated with higher long-term debt ratios, as firms listed in the U.S. raise their long-term debt ratios by 2 to 3 percentage points. This finding is consistent with the idea that, although the reduction in information asymmetry associated with SOX could prompt managers to increase equity financing, debt is still safer and less costly than equity in the SOX era. Further analysis shows that the increase in debt occurs in the two quarters prior to SOX, suggesting that firms anticipate a higher cost of debt after SOX and acquire debt while it is relatively cheap. Also, firms that heavily (lightly) manage earnings prior to SOX use less (more) debt after SOX. This result is consistent with the view that firms that aggressively manage earnings before SOX reveal intrinsically weaker earnings after SOX, casting doubt on those firms’ ability to repay debt and relegating those firms to issue equity for financing purposes. Keywords: capital structure; earnings management; debt ratio; Sarbanes-Oxley. JEL Classifications: G32; G38. Data Availability: Data available upon request. Kelly E. Carter is an Assistant Professor at Morgan State University. I particularly thank Terry Shevlin (co-editor) and an anonymous referee for their detailed, excellent comments, which greatly improved this paper. I also thank Alexander Butler, Laura...
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...Express Trusts – How do they work? LAW351 Equity & Trusts, Week 12 Friday Agenda Today * Trustees’ Powers * Trustees’ Rights * Beneficiaries’ Rights * Remedies for Breach of Trust Trustees Powers * The trustee has the powers conferred upon him in the trust instrument. If any * First in the instrument then look at the act(statute), if that fails you go to the court and seek a court order Statutory Trustees’ Powers * In addition to these, trustees have a variety of statutory powers, including: * The power to sell property (s27(1)(a), (b), (c)); * The power to lease property (s27(1)(d), (e)) including the power to renew leases under s36; * The power to expend money to repair, maintain or renovate property (s30(1)(a)). * If money is expended to improve or develop the property then the amount is limited to $20 000 ($50 000 if the trustee is acting on the advice of someone who the trustee reasonably believes to be competent to advise on improvement and development). * unless the Court consents (s30(1)(c)); * The power to “make decisions” with respect to any debts. (s42); * The power to insure the trust property (s46) and the power to use any insurance payout to replace, repair, rebuild etc damaged trust property (s47(4)). Here it is the power to insure – in the last lectures we have looked at the duty to insure. * The power to raise money by selling or mortgaging trust property...
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...Running Title A Comparative Analysis of the Profitability of Two Potential Equity Investments Janet Zaharchuk BUSI 1043 – Introduction to Financial Accounting Professor: Brent Koritko Sunday, July 26, 2015 Yorkville University INTRODUCTION The purpose of this report is to perform a comparative analysis of the profitability of two potential equity investments: Auto Wash Bot Ltd. (AWBL) and Popeye’s Muscle Wash Ltd. (PMWL). AWBL is selling 50% ownership for $100,000 in efforts to pursue expansion in the mobile device industry, and PMWL is selling 100% of its business for $100,000 to pursue retirement. A complete analysis of each company’s income statement will report key issues in both firms, as well as offer a recommendation given the case facts. REVIEWING LAST YEAR’S EARNINGS Comparative Income Statements Auto Wash Bot Ltd. & Popeye’s Muscle Wash Ltd. (for the year ended December 31, 2015) | Auto Wash Bot Ltd. | Popeye’s Muscle Wash Ltd | Revenue | 375,000 | 375,000 | Cost of Goods Sold | 86,250 | 163,125 | Gross Profit | 288,750 | 211,875 | Other Expenses: | | | Advertising | 35,400 | 5,200 | Office Expense | 22,750 | 17,400 | Research | 195,000 | | Repairs & Maintenance | | 85,000 | Wages & Salaries | 40,000 | 50,000 | Total Other Expenses | 293,150 | 157,600 | Income Before Taxes | (4,400) | 54,275 | Income...
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...NEW TAX INCENTIVE FOR LONG-TERM EQUITY INVESTMENTS There has been a great deal of public discussion about the increased individual and corporate income tax rates and general harsh treatment of upper income taxpayers under the Omnibus Budget Reconciliation Act of 1993. However. there has been scant attention to what may, in fact, prove to be a silver lining in that tax cloud - the newly authorized capital gains exclusion for the stock of certain companies. Under the Act. non-corporate holders of stock in "qualified small businesses" can escape tax on up to one-half of any gain from the sale of that stock which they have held for at least five years. 1. Qualified Small Businesses The new tax benefit is only available if the issuing corporation ("Issuer") is a qualified small business on the date of the stock issuance and during "substantially" all of the period that an investor holds its stock. In order to qualify as a small business. an Issuer must satisfy the following requirements: A. Non-Qualifying Corporations: The corporation cannot be an S corporation; a domestic international sales corporation that has made an IRC section 936 election: a regulated investment company: a real estate investment trust. a real estate mortgage investment conduit or a cooperative. B. Conduct of Active Business: It must use at least 80% (by value) of its assets (including intangible assets) in the actual conduct of a "qualified trade or business...
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...Contract Formation Author: Jason Dorman Business Law Professor Riggs 11-24-2013 A contract must have certain elements to be considered a contract. However, there are also elements that exist that will negate a contract as well. Fraud, undue influence and duress are all elements that will negate a contract. When a contract is breached or negated one party can collect damages or seek equitable remedies. The common law doctrine of election of remedies prevents individuals from taking advantage of the system. These elements are what an individual would not want to deal in any business situation. There are also elements in place to prevent a party from double recovery and this is called the common law doctrine of election of remedies. What we can learn from contracts is that neither side will deceive the other. What is fraud and how does it affect a contract? Fraud is an intentional act by one party to deceive another. “Fraud prevents a mutual agreement to a contract because one party intentionally deceives another as to the nature and the consequences of a contract.” [legal-dictionary.thefreedictionary.com] When each party involved in the contract states their terms. The terms must be factual and any misrepresentation of the truth can void the contract. However, there are situations where an individual’s intentions are to get over on the other party. This is why it is important to read the contract before signing it. What is undue influence? “Undue...
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...QUESTION “There must be somebody in whose favour the court can decree performance” Discuss the principle enunciated in the above statement and the exceptions thereof with the aid of appropriate case law “There must be somebody in whose favour the court can decree performance” INTRODUCTION In order for a trust to be valid, there needs to be an identifiable beneficiary who can either be an individual or a company . If for instance there is no beneficiary, and consequently the trust is for the achievement of some abstract purpose then the trust is to be considered as void. In the words of Lord Grant MR in the case of Morice v. Bishop of Durham : “There can be no trust, over the exercise of which this court will not assume control... if there can be clear, but for uncertain objects, the property… is indisposed of… Every… [Non-charitable] trust must have a definite object. There must be somebody in whose favour the court can decree performance. The rationale of the principle is to ensure the courts ability to administer the trust. Moreover in the case of Re Endacott it was said, in relation to the beneficiary principle, that ‘no principle has greater sanction and authority’ in the law of trust other that requiring the existence of a beneficiary. It is essential for validity. For instance in the case of Re Astor , a trust for the establishment , maintenance and improvement of good understanding, sympathy, and co-operation between nations was...
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