Int fin
--
----
J
-
..).
''[ ~
] :,6
: n.igll ";Xc/WIIM
."k "lIlIlpis
1/1/11"'lIIlI/gt'IIIt'II'
I. COll1mercial papn
isslIl'd ill thl' U.S. markl't, supportl'd by Ihe usual backstop lille costiug Xp.a.. at H.5 perce III for 180 days.' "
~. A V.S.S tc;rm loan, priced at 10 percent. subject 10 renewal at market
;/
rates after 24 months.
..'
t- v . 3. A six year revolving Eurodollar facilit)'. currently priced at 9 ~e)-cent for six months. or 10 percent for 24 1110nths.
4. A six year n~volviniEuro French franc facilil)' at 13 percent for six monlhs, or 1_4 percenl for 24 months. fl. A domestic franc overdraft facility; 10 percellt ('UITent cost.
. ;J 6. A two year term facility in domestic French frallcs at 11 percent, renewable at market rates.
7. A multicurrency facility consisting of UAE dinars, KDs and SRs, currently available at an all-in cost of 10 percent for 90 days, sourced out of a Bahrain OBU.
.,.
Gunter Dufey
Case
I7
Kemp Corporation
I~"III'~:
A, What is II 'hest French frallc oplion Kemp call obtain, given the nature of i 'needs?
B. ',\'hat is the least cost $ option that )'ou Gill provide to Kemp?
C. In which currency(s) should Kemp France be funded? Why?
D. Summari7.e your ad\'ice to Kemp.
~
(Funding Multinational Operations)
In 1975, Kemp Corp. USA decided to expand the production facilities of iL~ French subsidiary, Kemp Franc(~ SA, IOCitlednear Muhlheim, in order to serve the expanding markets for heavy construction machinery in the
Middle East from this plant. While these markets were expanding very rapidly. they were dominated by Caterpillar, Komatsu, and Terex (an affiliate of General Motors in Ohio). Kemp, being in a very cyclical b.usiness, was well capitalized and currently enjoyed an A bond rating, and S&P had given its credit subsidiary a commercial paper rating of A2-P2. Kemp, the parent, was never stingy with guarantees, but its treasury department demanded the
----
J
-
..).
''[ ~
] :,6
: n.igll ";Xc/WIIM
."k "lIlIlpis
1/1/11"'lIIlI/gt'IIIt'II'
I. COll1mercial papn
isslIl'd ill thl' U.S. markl't, supportl'd by Ihe usual backstop lille costiug Xp.a.. at H.5 perce III for 180 days.' "
~. A V.S.S tc;rm loan, priced at 10 percent. subject 10 renewal at market
;/
rates after 24 months.
..'
t- v . 3. A six year revolving Eurodollar facilit)'. currently priced at 9 ~e)-cent for six months. or 10 percent for 24 1110nths.
4. A six year n~volviniEuro French franc facilil)' at 13 percent for six monlhs, or 1_4 percenl for 24 months. fl. A domestic franc overdraft facility; 10 percellt ('UITent cost.
. ;J 6. A two year term facility in domestic French frallcs at 11 percent, renewable at market rates.
7. A multicurrency facility consisting of UAE dinars, KDs and SRs, currently available at an all-in cost of 10 percent for 90 days, sourced out of a Bahrain OBU.
.,.
Gunter Dufey
Case
I7
Kemp Corporation
I~"III'~:
A, What is II 'hest French frallc oplion Kemp call obtain, given the nature of i 'needs?
B. ',\'hat is the least cost $ option that )'ou Gill provide to Kemp?
C. In which currency(s) should Kemp France be funded? Why?
D. Summari7.e your ad\'ice to Kemp.
~
(Funding Multinational Operations)
In 1975, Kemp Corp. USA decided to expand the production facilities of iL~ French subsidiary, Kemp Franc(~ SA, IOCitlednear Muhlheim, in order to serve the expanding markets for heavy construction machinery in the
Middle East from this plant. While these markets were expanding very rapidly. they were dominated by Caterpillar, Komatsu, and Terex (an affiliate of General Motors in Ohio). Kemp, being in a very cyclical b.usiness, was well capitalized and currently enjoyed an A bond rating, and S&P had given its credit subsidiary a commercial paper rating of A2-P2. Kemp, the parent, was never stingy with guarantees, but its treasury department demanded the