Presentation on theme: "Case Studies in Structured Finance"— Presentation transcript:
1 Case Studies in Structured Finance Sealed AirIan Giddy August 2000
2 Questions :1. Why did Sealed Air undertake a leverage recapitalization ? Do you think that it was a good idea ? For whom ?2. How much value was created ? Where did it come from ?
3 Organizational effects of leverage Too little leverage-waste of resources inside organizationInefficiencyToo much scrap, capital expend.,R&DToo much leverage-pushed to generate cash at the expense of value-too little inventory-not enough credit for customers- skimping on quality, capital expend, R&D
4 Sealed Air's changing competitive environment They had traditionally neglected manufacturing in favour of marketing. - able to do this because of a lack of competitionAbout a year before the recap, they launched a program of manufacturing excellence.
5 What to do with the cash ?Understanding the Special Dividend TransactionThe Effect of the Recap on Firm Value and PerformanceChange in Shareholder Value over the year following the Recap
6 High Leverage and Manufacturing Excellence Organizational Effects of Leverage - already inChanges in Organizational Priorities and CompensationTurnovers in the Company's Investor BaseImplications of the case