Corporate FInace Assignment/ Professional Essay Writers
Quick Air S.L. was founded 10 years ago by friends Peter Smith and Javier Benet. The company has manufactured and sold light airplanes over this period, and the company’s products have received high reviews for safety and reliability. The company has a niche market in that it sells primarily to individuals who own and fly their own airplanes. Peter and Javier have decided to expand their operations. They instructed their newly hired financial analyst, Laura Sanchez, to enlist an underwriter to help sell $35 million in new 10-year bonds to finance construction. Laura has entered into discussions with Sandra Harper, an underwriter from the firm of Castle & Partners, about which bond features Quick Air should consider and what coupon rate the issue will likely have.
Although Laura is aware of the bond features, she is uncertain about the costs and benefits of some features, so she isn’t sure how each feature would affect the coupon rate of the bond issue. You are Sandra’s assistant, and she has asked you to prepare a memo to Laura describing the effect of each of the following bond features on the coupon rate of the bond. She would also like you to list any advantages or disadvantages of each feature.
- The security of the bond (that is, whether the bond has collateral). (5 points)
- The seniority of the bond. (5 points)
- The presence of a sinking fund. (5 points)
- A call provision with specified call dates and call prices. (5 points)
- Any positive covenants. Also, discuss several possible positive covenants Quick Air might consider. (5 points)
- Any negative covenants. Also, discuss several possible negative covenants Quick Air might consider. (5 points)
- A conversion feature (note that Quick Air is not a publicly-traded company). (5 points.) Get Finance Help Today