TMI BlogCORPORATE RESTRUCTURING - FUNDING OF MERGER AND TAKEOVERSX X X X Extracts X X X X X X X X Extracts X X X X ..... re than the value obtained by mere addition of the present values of each individual company. Various types of Financial instruments used for funding 1.Funding through Equity Shares Equity Share Capital can be considered as the permanent capital of a company. Equity needs no servicing as a company is not required to pay to its equity shareholders any fixed amount return in the form of interest which would be the case if the company were to borrow issue of bonds or other debt instruments. In issue of Equity shares, the commitment will be to declare dividends consistently if profit permits. 2. Funding through Preferential Allotment Private placement in the form of a preferential allotment of shares is po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . A merger arbitrage specialist will sell the acquiring company s stock short, and will purchase a long position in the target company, using the same ratio as that of the proposed transaction. 7.Funding through Employees Stock Option Scheme This option may be used along with other options. ESOP Scheme is a voluntary scheme on the part of a company to encourage its employees to have a higher participation in the company. Stock option is the right but not an obligation granted to an employee. Only bonafide employees of the company are eligible for shares under scheme. The option granted to any employee is not transferable to any other person. 8 . Funding through External Commercial Borrowings ECB refers to commercial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pre- determined period. 12.Funding through Rehabilitation Finance Sick Industries get attached through BIFR with healthy units with financial package to the acquirer from the financial institutions and the banks having financial stakes in the acquire company to ensure rehabilitation and recovery of dues from the acquirer. 13. Funding through Leveraged and Management Buyouts Options available for the revival of a sick company . One is buyout of such a company by its employees. It has distinct option over Government intervention and other conventional remedies. Leveraged Buyout is defined as the acquisition by a small group of investors, financed largely by borrowing. The buying group forms a shell company to ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
