CORNING CASE

 CORNING CIRCUMSTANCE Essay

UVA-F-1339

Version 2 . 6

CORNING, INC.: ACTUALLY ZERO COUPON COLLAPSIBLE DEBENTURES

THANKS NOVEMBER 8, 2015 (A)

On The fall of 8, 2150, Corning declared that it would issue $2. several billion in zero-coupon collapsible debentures priced at $741. 923 per $1, 000 principal amount. The first public supplying (IPO) cost yielded 2% per annum to maturity, exponentially boosted semiannually. A summary of terms has in Exhibit 1 . Concurrent with the giving, Corning also conducted a unique public offering of 31 million shares of its common share at $71. 25 every share. you Neither supplying was broker upon completing the other. The entire loans would increase around $4. 8 billion dollars.

Corning organized to use the proceeds of both offerings to fund their acquisition of Pirelli S. g. A. 's 90% interest in Optical Solutions USA, Pirelli's optical-components and -devices organization. The total acquisition consideration was approximately $3. 6 billion dollars in funds. The buy agreement had been announced in September twenty-seven, 2000, and pended regulatory approval. Experts agreed, however , that the purchase was likely to be completed. The void of the Corning zero-coupon changeable came to the attention of Julianna Coopers, an investment analyst in the Paradigm Group of mutual funds. The Paradigm Group offered 36 different funds and managed more than $50 billion in resources. Coopers and her group handled Paradigm's Convertible Securities Fund, which will sought " high results through a combination of current cash flow and capital appreciation. ”

Coopers was tasked with assessing the newest issue of Corning changeable. That working day, she needed to decide whether to advise purchasing some of the bonds to get the Convertible Securities Fund. Her task was to measure the risk of the bond issue, and judge the adequacy of the deliver, offering selling price, and the conversion terms.

you

www.ipo.com.

The case was made by Jessica Chan, under the supervision of Robert F. Bruner. It was written as a basis for discussion in the classroom rather than to illustrate powerful or useless handling associated with an administrative circumstance. Copyright пЈ© 2001 by University of Virginia Darden School Groundwork, Charlottesville, VA. All legal rights reserved. To order clones, send an e-mail to [email protected] com. No a part of this newsletter may be produced, stored in a retrieval program, used in a spreadsheet, or perhaps transmitted in any form or by virtually any means—electronic, mechanised, photocopying, saving, or otherwise—without the permission of the Darden School Basis. в—Љ

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UVA-F-1339

The organization

Corning, Incorporation., competed in three generally defined operating segments: Telecoms, Advanced Materials, and Data Display. The Telecommunications division accounted for approximately 70% of company's income. Exhibit 2 contains a failure of revenue and net gain by functioning segment. Display 3 provides a detailed breakdown of the products within every operating portion.

Corning was the world's greatest manufacturer of optical fibers and amplifiers, with a 50 percent share with the optical fiber market, 2 times that of its nearest competition, Lucent. At the time of the providing, the dietary fiber market was at a sold-out state, and Corning acquired presold the next 18 months of its whole fiber production capacity. a couple of Worldwide demand for fiber grew by 40% in 1999, and management predicted the same powerful growth charge for 2000. Going forward, sector analysts predicted the total annual growth price for dietary fiber to be between 20% and 25% through 2002, however was a few debate with regards to a potential fiber glut.

Inside the company's Telecoms division, it is photonics organization increased at a triple-digit annual level. The photonics business made products that enhanced the flexibleness and performance of communications sites. Those products boosted, combined, separated, and connected optical signals transmitted over dietary fiber optic systems. Because of solid demand, Corning expanded capacity for photonics six-fold over the...

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