12.4 In 1991 Pet¨ofi Printing Company was the leading packaging company in Hungary.35 Since its privatization by the Hungarian State Property Agency in 1990, capital expenditures had been adequately funded by its internally generated cash flow. However, by the end of 1991, management had identified substantial opportunities in the introduction of new packaging products, including flip-top box packaging. In order to fund the introduction of these products, the existing shareholders determined to make a private placement of common shares. The company’s investment bank had obtained an expression of interest from two

b. Their corporate tax rate was about 40%.