You are the CFO of RealNetworks on July 1, 2008. The company's stock price is $9.70 and its convertible debt (as shown in Table 15.8) is now callable.
* Course Hero B Week 6 Debt Fina VitalSource Bo X Assignment Folde G You are the CFO c * Tutorial 1 with an * Tutorial9_Convert * [Solved] Your firm * Course Hero -CA A https://bookshelf.vitalsource.com/#/books/9780135219546/cfi/571!/4/4@0.00:36.6 ... VY E the subordinated bond could be lower than that of the senior bonds. One example is Library 15 Debt Financing RealNetworks, which issued $100 million in subordinated convertible debt in 2003 with a zero coupon rate. As described in Table 15.8, the debt also contained a provision allowing the company to call the debt at par anytime after July 1, 2008. RealNetworks IF Go to 15 Debt Financing exercised its option to call the debt in 2008, paying $100 million to repurchase the debt from the debtholders. Q 15.1 Corporate Debt V leveraged buyout (LBO) 520 The purchase by a group Leveraged Buyouts. Recall from Chapter 14 our discussion of how private companies of private investors of become public companies. The deal in which CDR bought Hertz is an example of the Notebook 2 Other Types of Debt V all the equity of a public opposite transition-a public company becoming private, in this case through a lev- corporation, primarily eraged buyout. In a leveraged buyout (LBO), a group of private investors purchases through debt financing all the equity of a public corporation and finances the purchase primarily with debt. 529 15.3 Bond Covenants V 530 15.4 Repayment Provisions > 538 MyLab Finance SUMMARY TABLE 15.8 RealNetworks' 2003 Convertible Debt Issue Convertible Subordinated Notes 540 REVIEW QUESTIONS Issued Under U.S. SEC Rule 144A Aggregate principal amount $100 million 541 PROBLEMS Proceeds net of offering costs $97.0 million Coupon 0% 542 DATA CASE Conversion ratio 107.5650 shares per $1000 principal amount CHAPTER 15 APPENDIX: USING Call date July 1, 2008 544 A FINANCIAL CALCULATOR TO.. Call price 100% Maturity July 1, 2010 545 PART 5 INTEGRATIVE CASE "At the time of the deal, Hertz was a wholly owned subsidiary of Ford Motor Company, which itself is a public company. Prior to Ford's acquisition of Hertz's outstanding shares in 2001, Hertz was publicly traded
