Other Papers and Articles
Damages Estimation After Natural Disasters
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A Closer Look at Preferred Stock Financing
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Evaluating a Stock-for-Debt Swap: The Proper Framework
The deep discounts at which low-interest rate corporate bonds are trading provide attractive opportunities for companies to reacquire portions of outstanding issues profitably via so-called ''stock-for-debt swaps.'' Before undertaking such a swap, the economics of the swap should be evaluated. For an electric utility, the economics of the swap should be evaluated from the standpoint of the utility's common stockholders. An analytical framework is presented for making such an evaluation, and an example is provided to illustrate the procedure. The method can be used when the company's objective is either to enhance the profitability of refunding discounted debt or to achieve a permanent financial restructuring. One complication for a utility company is that a swap may have a positive net present value but regulators might channel all the benefits to the company's ratepayers.
How to Lower the Cost of Floating a New Stock Issue
Institutional demand for electric utility common stocks increased during 1982. This increase offered electric companies the opportunity to sell new issues of their common stock on advantageous terms. Certain electric companies may still be able to benefit from targeting all or a part of their next common stock offerings at institutional investors. A carefully timed and executed offering of a new issue to the investors can afford significant savings for electric utility companies whose common stock has institutional appeal. Investors recognize that reduced general inflation benefits electric utility common stocks by reducing long-term interest rates and by lowering the cost of equity capital to electric utilities. The common stock of electric companies that have reached the end of the current phase of their construction programs has comparatively more attractive dividend growth prospects than does the common stocks of other electric companies. The recognition of this fact by institutional investors helps to explain the renewed institutional interest in utility stocks.
Capital Investments
The Case for Issuing Synthetic Convertible Bonds
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The Pluses of Zeros
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Refunding High-Coupon Debt
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Where is the Value Added in Securities Innovation
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An Analysis of Tuition Prepayment Plans
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