Managerial Finance W2-IP.

Case Scenario:
Financing J&J Air’s Expansion Plans with a Bond Issue.
Mike Jackson and
Terrence Jensen are the owners of J&J Air, and they recently decided to
expand the company. Recently hired financial analyst, Gus Christie, has been
instructed to locate an underwriter who can help the firm sell $35 million in
new 10-year bonds. The bonds will be used to finance construction as part of
the firm’s expansion. Valerie Harper is an underwriter with the investment
banking firm of Warren & Zevon. After Gus contacted her, Valerie briefed
him regarding various bond features J&J should consider, along with an
appropriate coupon rate for the anticipated bond issue.
Gus is aware of the
bond features, although he is uncertain regarding the costs and benefits of
some features. Accordingly, he remains unsure about how each of these features
might influence the bond issue’s coupon rate. Assume you
are Valerie’s assistant, and she has asked you to draft a memo to Gus that
clearly describes the effect of each of the following bond features on the
coupon rate of the new bond issue. She also instructed you to describe the
advantages and disadvantages of each feature.

Required for this
Essay:
Assume you are Valerie’s assistant, and she has asked you to draft a memo to
Gus that clearly describes the effect of each of the following bond features on
the coupon rate of the new bond issue. She also instructed you to describe the
advantages and disadvantages of each feature:

The security of the bond,
i.e., whether the bond has collateral.
The seniority of the bond.
The presence of a sinking
fund.
A call provision with
specified call dates and call prices.
A deferred call accompanying
the call provision.
A make-whole call provision.
Any positive covenants. Also,
discuss several possible positive covenants J&J Air might consider.
Any negative covenants. Also,
discuss several possible negative covenants J&J Air might consider.
A conversion feature (note
that S&S Air is not a publicly traded company).
A floating rate coupon.

Guidelines:
-Use APA Format.
-Do not use websites like Wikipedia as references.
-One of your sources of
reference must be the textbook.

Note to writer:
Additional instructions
related to the textbook will be given once the order is accepted. You are
required to cite from the textbook.

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