HAMPTON MACHINE TOOL COMPANY On September 14, 2007, Jerry Eckwood, vice president of the Wellington National Bank was considering a loan request from a customer also located in Wellington, New Zealand. The company, Hampton Machine Tool Company, had requested renewal of an existing $1 million loan originally to be repaid September 30, 2007. In addition to the renewal of the existing loan, Hampton was asking for an additional load of $350,000 for planned equipment purchases in October. Under
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On September 12, 1979, Hampton Machine Tool Company (HMTC) requested from St. Louis National Bank a renewal to their loan of $1,000,000 due to be repaid on September 30, 1979 and also to be given an additional loan of $350,000 for new equipment purchases in October 1979. Both loans were to be repaid on December 31, 1979. Hampton M.T. Company wrote a letter to the St. Louis National Bank stating the reasons for the extension of the loan and the need of the additional loan, and giving the current and
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Cases in Finance September 26, 2012 Dr. Thomas McCue Case 1: Hampton Machine Tools Evan Cvejkus Hampton Machine Tools is a company that specializes in the production and manufacturing of machine tools. The company has been in existence since 1915 and weathered all economic and internal struggles where most of their competitors met defeat. In order to purchase new equipment, Hampton requires a new loan of $350,000 and also wants to renew their current loan of $1,000,000 that will soon expire
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Hampton Case Study Study Case: Hampton Machine Tool Background. Hampton Machine Tool Company, a machine tool manufacturer, was founded in 1915. Hampton's customers are military aircraft and automobile manufacturers in the St. Louis area. Machine Tool Company felt the boom in the 1960`s with record setting profits in the mid- to late- 1960`s. The company slowed down in the 1970`s economic recession caused by Vietnam War and the oil embargo. Hampton stabilized by the late 1970`s and now has
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Hampton Machine Tool Company, a profitable machine tool manufacturer, is trying to renew a 1 million dollar loan due September 30, 1979 until December 31, 1979. Through examination of the case, it is clear that Hampton will be unable to repay the loan; however, at first glance Hampton seems to be a profitable company that would be able to pain the loan on time and would not need more bank financing. Unfortunately, that is not the case. Hampton, by making a stock repurchase for which the loan was
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Study Case: Hampton Machine Tool Background. Hampton Machine Tool Company, a machine tool manufacturer, was founded in 1915. Hampton's customers are military aircraft and automobile manufacturers in the St. Louis area. Machine Tool Company felt the boom in the 1960`s with record setting profits in the mid- to late- 1960`s. The company slowed down in the 1970`s economic recession caused by Vietnam War and the oil embargo. Hampton stabilized by the late 1970`s
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Student ID#: 285 Firm: Hampton Machine Tool Company Nature of business: Machine Tool Manufacturing Overview Hampton Machine Tool Company was founded in 1915 and experienced record production and profitability throughout the years despite hard economic times for the machine manufacturing business. Sales declined throughout the mid 1970’s from the post Vietnam War demand, the declining automobile industry in St. Louis, and the gas embargo of the early 1970’s. Hampton did eventually recover due
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Problems Facing Hampton • Hampton seeks to renew its current $I million note payable by 3 months, whilst securing an additional $350,000 in loans payable in 3 months. • Some issues faced by Hampton as it seeks the new loan and renews the current loan o Monthly interest rate of 1½ % on the Principal and additional $350,000 (if secured) and ability to repay loan with these interest payment commitments o Old machinery requiring upgrade to effectively meet capacity production. o Limited free cash
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Hampton Machine Tool Co. 1. Why can’t a profitable firm like Hampton repay its loan on time and why does it need more bank financing? What major developments between November 1978 and August 1979 contributed to this situation? - Hampton is having a hard time repaying its loan because of its steep decline in sales it experienced the past few years. This decline can be traced back to the oil embargo, increase of gasoline prices and the recession. After these three events began to dissipate
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Case: Hampton Machine Tool Company Assignment Questions Why can’t a profitable firm like Hampton repay its loan on time and why does it need more bank financing? What major developments between November 1978 and August 1979 contributed to this situation? The main reason why the company cannot repay its loan is because the company bought back 75,000 of shares at a cost of $3m. ($1m from the loan, $2m of cash) The company have also poorly forecasted sales from January to August ($11.9) with actual
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