Presentation on theme: "Case Studies in Structured Finance"— Presentation transcript:
1Case Studies in Structured Finance Sealed AirIan Giddy August 2000
2Questions :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 ?
3Organizational 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
4Sealed 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.
5What 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
6High Leverage and Manufacturing Excellence Organizational Effects of Leverage - already inChanges in Organizational Priorities and CompensationTurnovers in the Company's Investor BaseImplications of the case