James C. Van Horne
Stanford Graduate School of Business
SUBJECT AREAS: Bonds, corporate restructuring, financial strategy, and expropriation of bondholder wealth.
CASE SETTING: 1992, USA, hotel company.
This case provides a platform for general discussion of corporate restructuring and the creation/destruction of value. The central issue is the transfer of wealth from bondholders to stockholders, and whether it is proper for a company to exploit bondholders in such a manner. The expropriation of bondholder wealth occurs because the creditworthiness of Host Marriott, where most of the debt will reside, is lower than the pre-restructured Marriott Corporation. The ability of Host Marriott to service the debt is a topic of interest, as are the information effects on bond and stock prices that accompany the announcement.
REQUEST FOR COPIES: To receive a copy of this case, please contact:
Harvard Business School Publishing
60 Harvard Way
Boston, MA 02163
JEL Classification: G32, G34, L84Case and Teaching Paper Series
Date posted: September 22, 1997
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