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Case Studies in Structured Finance Sealed Air Ian Giddy August 2000.

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Presentation on theme: "Case Studies in Structured Finance Sealed Air Ian Giddy August 2000."— Presentation transcript:

1 Case Studies in Structured Finance Sealed Air Ian 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 organization - Inefficiency - Too much scrap, capital expend., - R&D Too 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 competition About a year before the recap, they launched a program of manufacturing excellence.

5 What to do with the cash ? Understanding the Special Dividend Transaction The Effect of the Recap on Firm Value and Performance Change in Shareholder Value over the year following the Recap

6 High Leverage and Manufacturing Excellence Organizational Effects of Leverage - already in Changes in Organizational Priorities and Compensation Turnovers in the Company's Investor Base Implications of the case

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