某公司财务管理及财务知识分析

PreferredstockLeasingWarrantsConvertiblesRecentinnovationsCHAPTER20

HybridFinancing:PreferredStock,Leasing,Warrants,andConvertibles第一页，共四十四页。LeasingLeasingissometimesreferredtoas“offbalancesheet”financingifaleaseisnot“capitalized.”Inotherwords,itisnotshownonthebalancesheet.Leasingisasubstitutefordebtfinancingand,thus,usesupafirm’sdebtcapacity.(More...)第二页，共四十四页。Capitalleasesaredifferentfromoperatingleases:Capitalleasesdonotprovideformaintenanceservice.Capitalleasesarenotcancelable.Capitalleasesarefullyamortized.第三页，共四十四页。Analysis:Leasevs.Borrow-and-BuyData:Newmachinecosts$1,200,000.3-yearMACRSclasslife;4-yeareconomiclife.Taxrateof40%.kd=10%.(More...)第四页，共四十四页。Maintenanceof$25,000/year,payableatbeginningofeachyear.ResidualvalueinYear4of$125,000.4-yearleaseincludesmaintenance.Leasepaymentis$340,000/year,payableatbeginningofeachyear.第五页，共四十四页。DepreciationScheduleDepreciablebasis=$1,200,000 MACRS Depreciation End-of-YearYear Rate Expense BookValue1 0.33 $396,000 $804,0002 0.45 540,000 264,0003 0.15 180,000 84,0004 0.07

84,000 0

1.00

$1,200,000第六页，共四十四页。Inaleaseanalysis,whatdiscountrateshouldcashflowsbediscountedat?Sincecashflowsinaleaseanalysisareevaluatedonanafter-taxbasis,weshouldusetheafter-taxcostofborrowing.Previously,weweretoldthecostofdebt,kd,was10%.Therefore,weshoulddiscountcashflowsat6%.A-T

kd=10%(1–T)=10%(1–0.4)=

6%.第七页，共四十四页。CostofOwningAnalysis

(InThousands)Costofasset (1,200.0)Dep.taxsavings1 158.4 216.0 72.0 33.6Maint.(AT)2 (15.0) (15.0)(15.0) (15.0)Res.value(AT)3 ______ _____ _____ _____ 75.0Netcashflow (1,215.0) 143.4 201.0 57.0 108.6PVcostofowning(@6%)=-$766,948.01234(More...)第八页，共四十四页。Notes:1 Depreciationisataxdeductibleexpense,soitproducesataxsavingsofT(Depreciation).Year1=0.4($396)=$158.4.2 Eachmaintenancepaymentof$25isdeductiblesotheafter-taxcostoftheleaseis(1–T)($25)=$15.3 Theendingbookvalueis$0sothefull$125salvage(residual)valueistaxed.第九页，共四十四页。CostofLeasingAnalysis

(InThousands)Leasepmt(AT)1 -204 -204 -204 -204PVcostofleasing(@6%)=-$749,294.Note:1Eachleasepaymentof$340isdeductible,sotheafter-taxcostoftheleaseis(1–T)($340)=-$204.01234第十页，共四十四页。NetAdvantageofLeasingNAL =– =$766,948–$749,294 =$17,654.PVcostofowningPVcostofleasingSincethecostofowningoutweighsthecostofleasing,thefirmshouldlease.第十一页，共四十四页。Supposecomputer’sresidualvaluecouldbeaslowas$0orashighas$250,000,butexpectedvalueis$125,000.HowcouldtheriskinessoftheSVbeincorporatedintheanalysis?Whateffectwouldthishaveonleasedecision?Toaccountforrisk,therateusedtodiscounttheSVwouldbeincreased;therefore,thecostofowningwouldbeevenhigher.Leasingbecomesevenmoreattractive.第十二页，共四十四页。Whateffectwouldacancellationclausehaveontheriskinessofthelease?Acancellationclauselowerstheriskoftheleasetothelessee,butincreasestherisktothelessor.第十三页，共四十四页。Preferreddividendsarefixed,buttheymaybeomittedwithoutplacingthefirmindefault.Mostpreferredstocksprohibitthefirmfrompayingcommondividendswhenthepreferredisinarrears.Usuallycumulativeuptoalimit.Howdoespreferredstockdifferfromcommonequityanddebt?第十四页，共四十四页。Dividendsareindexedtotherateontreasurysecuritiesinsteadofbeingfixed.ExcellentS-Tcorporateinvestment:Only30%ofdividendsaretaxabletocorporations.Thefloatingrategenerallykeepsissuetradingnearpar.Whatisfloatingratepreferred?第十五页，共四十四页。However,iftheissuerisrisky,thefloatingratepreferredstockmayhavetoomuchpriceinstabilityfortheliquidassetportfoliosofmanycorporateinvestors.第十六页，共四十四页。Awarrantisalong-termcalloption.Aconvertibleconsistsofafixedratebondplusacalloption.Howcanaknowledgeofcalloptionshelponeunderstandwarrantsandconvertibles?第十七页，共四十四页。P0=$10.kdof20-yearannualpaymentbondwithoutwarrants=12%.50warrantswithanexercisepriceof$12.50eachareattachedtobond.Eachwarrant’svaluewillbe$1.50.Giventhefollowingfacts,whatcouponratemustbesetonabondwithwarrantsifthetotalpackageistosellfor$1,000?第十八页，共四十四页。Step1:CalculateVBondVPackage=VBond+VWarrants=$1,000.VWarrants=50($1.50)=$75.VBond+$75 =$1,000VBond =$925.第十九页，共四十四页。Step2:FindCouponPaymentandRateNI/YRPVPMTFV2012-9251000Solution:110Therefore,therequiredcouponrateis$110/$1,000=11%.第二十页，共四十四页。Thepackagewouldactuallyhavebeenworth Vpackage=$925+50($2.50)=$1,050, whichis$50morethantheactualsellingprice.Ifafterissuethewarrantsimmediatelysellfor$2.50each,whatwouldthisimplyaboutthevalueofthepackage?第二十一页，共四十四页。ThefirmcouldhavesetlowerinterestpaymentswhosePVwouldbesmallerby$50perbond,oritcouldhaveofferedfewerwarrantswithahigherexerciseprice.Currentstockholdersaregivingupvaluetothewarrantholders.第二十二页，共四十四页。Generally,awarrantwillsellintheopenmarketatapremiumaboveitstheoreticalvalue(itcan’tsellforless).Therefore,warrantstendnottobeexerciseduntiljustbeforetheyexpire.Assumethatthewarrantsexpire10yearsafterissue.Whenwouldyouexpectthemtobeexercised?第二十三页，共四十四页。Inastepped-upexerciseprice,theexercisepriceincreasesinstepsoverthewarrant’slife.Becausethevalueofthewarrantfallswhentheexercisepriceisincreased,step-upprovisionsencouragein-the-moneywarrantholderstoexercisejustpriortothestep-up.Sincenodividendsareearnedonthewarrant,holderswilltendtoexercisevoluntarilyifastock’sdividendrisesenough.第二十四页，共四十四页。Whenexercised,eachwarrantwillbringintheexerciseprice,$12.50.Thisisequitycapitalandholderswillreceiveoneshareofcommonstockperwarrant.Theexercisepriceistypicallysetat10%to30%abovethecurrentstockpriceontheissuedate.Willthewarrantsbringinadditionalcapitalwhenexercised?第二十五页，共四十四页。No.Asweshallsee,thewarrantshaveacostthatmustbeaddedtothecouponinterestcost.Becausewarrantslowerthecostoftheaccompanyingdebtissue,shouldalldebtbeissuedwithwarrants?第二十六页，共四十四页。Thecompanywillexchangestockworth$17.50foronewarrantplus$12.50.Theopportunitycosttothecompanyis$17.50–$12.50=$5.00.Bondhas50warrants,soonaparbondbasis,opportunitycost=50($5.00)=$250.Whatistheexpectedreturntotheholdersofthebondwithwarrants(ortheexpectedcosttothecompany)ifthewarrantsareexpectedtobeexercisedin5yearswhenP=$17.50?第二十七页，共四十四页。Hereisthecashflowtimeline:0 1 4 5 6 19 20+1,000-110 -110 -110 -110 -110 -110

-250

-1,000 -360 -1,110InputthecashflowsinthecalculatortofindIRR=12.93%.Thisisthepre-taxcostofthebondandwarrantpackage.......第二十八页，共四十四页。Thecostofthebondwithwarrantspackageishigherthanthe12%costofstraightdebtbecausepartoftheexpectedreturnisfromcapitalgains,whichareriskierthaninterestincome.Thecostislowerthanthecostofequitybecausepartofthereturnisfixedbycontract.第二十九页，共四十四页。20-year,10%annualcoupon,callableconvertiblebondwillsellatits$1,000parvalue;straightdebtissuewouldrequirea12%coupon.Callthebondswhenconversionvalue>$1,200.P0=$10;D0=$0.74;g=8%.Conversionratio=CR=80shares.Assumethefollowingconvertiblebonddata:第三十页，共四十四页。Whatconversionprice(Pc)isbuiltintothebond?Theconversionpriceistypicallyset10%to30%abovethestockpriceontheissuedate.$1,00080

Pc = ==$12.50.Parvalue#Sharesreceived第三十一页，共四十四页。ExamplesofrealconvertiblebondsissuedbyInternetcompaniesIssuerABCNETDoubleClickMindspringNetBankPSINetSportsLSizeofissue$1,250mil55mil173mil250mil180mil100mil400mil150milCvtPrice$156.0518.3474.8116562.535.6762.3665.12Priceatissue$122168413460325552第三十二页，共四十四页。Whatis(1)theconvertible’sstraightdebtvalueand(2)theimpliedvalueoftheconvertibilityfeature?PVFV20 12 1001000Solution:-850.61I/YRPMTNStraightdebtvalue:第三十三页，共四十四页。Becausetheconvertibleswillsellfor$1,000,theimpliedvalueoftheconvertibilityfeatureis $1,000–$850.61=$149.39. =$1.87pershare.Theconvertibilityvaluecorrespondstothewarrantvalueinthepreviousexample.ImpliedConvertibilityValue$149.3980shares第三十四页，共四十四页。Conversionvalue=Ct=CR(P0)(1+g)t.t=0 C0 =80($10)(1.08)0=$800.t=10 C10 =80($10)(1.08)10 =$1,727.14.

Whatistheformulaforthebond’sexpectedconversionvalueinanyyear?第三十五页，共四十四页。Thefloorvalueisthehigherofthestraightdebtvalueandtheconversionvalue.Straightdebtvalue0=$850.61.C0=$800.FloorvalueatYear0=$850.61.Whatismeantbythefloorvalueofaconvertible?第三十六页，共四十四页。Straightdebtvalue10=$887.00.C10=$1,727.14.Floorvalue10=$1,727.14.Convertiblewillgenerallysellaboveitsfloorvaluepriortomaturitybecauseconvertibilityoptionhasanadditionalvalue.第三十七页，共四十四页。ThefirmintendstoforceconversionwhenC=1.2($1,000)=$1,200.Whenistheissueexpectedtobecalled?PVFV

8-80001200Solution:N=5.27I/YRPMTN第三十八页，共四十四页。Whatistheconvertible’sexpectedcostofcapitaltothefirm?AssumeconversioninYear5at$1,200.0 1 2 3 4 51,000 -100-100 -100 -100-100

-1,200

-1,300InputthecashflowsinthecalculatorandsolveforIRR=13.08%.第三十九页，共四十四页。Forconsistency,needkd<kc<ke.Why?Theconvertiblebond’sriskisablendoftheriskofdebt