Walt Disney Financing

Case study in Derivatives

The Walt Disney Company’s Yen Financing

GROUP SIX Liang Zhang Xiao Cao Xiang Wang Le Lu
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Contents & Structure
Part I. Overview -----------------------------------------------------------------------------------------3 Part II. The problem facing Disney ----------------------------------------------------------------- 3 Status quo 1 - JPY royalties grows fast -------------------------------------------------- 3 Status quo 2 – JPY/USD rate fluctuation -------------------------------------------------3 Problem Summary --------------------------------------------------------------------------- 4 Part III. Various ways of hedging the exposure-------------------------------------------------- 5 Unsatisfied ways of Hedging ---------------------------------------------------------------5 Two Viable Alternatives --------------------------------------------------------------------- 5
(IRR analysis – compare the cost of each alternative)

Alternative 1 --- JPY Term Loan --------------------------------------------------5 Alternative 2 --- ECU Eurobond + ECU/YEN SWAP--------------------------- 6 ECU Eurobond ---------------------------------------------------------- 6 ECU/YEN SWAP -------------------------------------------------------- 7

Part IV. Conclusion ------------------------------------------------------------------------------------- 9

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Harvard Business School

The Walt Disney Company’s Yen Financing

Part I. Overview
- the Walt Disney Company The Walt Disney Company, a diversified international company headquartered in Burbank, California, operated entertainment and recreational complexes, produced motion picture and television features, developed community real estate projects, and sold consumer products. The company was founded in 1938 as successor to the animated motion picture business established by Walt and Roy Disney in