PM History/2 - Legacy Tobacco Documents Library
PM History/2 - Legacy Tobacco Documents Library
PM History/2 - Legacy Tobacco Documents Library
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<strong>PM</strong> history/42B<br />
for good will ; thus its assets are on its books at less than half of the<br />
debt load . . .THIS NEGATIVE NET WORTH OF I1TORE THAN $6 BILLION extremely<br />
large . but Wall St thinks only accountants worry about book va7 .ua . which<br />
is s id to undervalue such tha .n s as brand n . .most past LBOs<br />
have wound up w equi o a eas /o 0 o a capitalization . . .Smith<br />
Barney analysts there won't be much cash flow left in the co . & says the<br />
"stub" would be wo~~~~J, .~..,~.q.~~,l never seen a reca<br />
this levera~e'~:: :fi0 OFFSET, riormally there would be ~s~ .Ra+,,_,y.~„~1,.~,-o ,7s,~<br />
down t e debt do°milcFi'ti~"'this ; if "~s~icks ; 1,10 pay to<br />
3'^tr "g`uns"Ve"I~imited assets sale, it may have to resort to PIK bonds, pay-inkinds,<br />
a good way of deferring cash flow problems for yrs, albeit at a<br />
high cost~/overall : LITTLE MARGIN FOR ERROR . . .but likely such a deal will<br />
be accomplished ":UNLESS- WILLING TO RAISE ITS BID TO SOMETHING AT LEAST<br />
CLOSE TO THE CLAIMED VALUE OF $110 A SHARE"<br />
--TALKING DEALS : KRAFT TAKEOVER, SMOOTH & SWIFT, NYT 11-3-88 : Both sides<br />
started following speedy game_-m] ._ans they saY were thought put well in advance<br />
. . .unusua a.n atth large co .s usual~y use maneuvers o en o$1 predators,<br />
but here both 7~~ .~ .f-~,&. ressure forn1r" & satis-<br />
~3k 3 .- 'F . #~, r . ~^~° '~~ ~cs_<br />
factory ag .f°e~Yfi~x'~"~'~~1~xt`in ipton lieard about'PP+I Hare d"n<br />
wa~"'Ca"TTi",""E-a.ZTed Kraft, his longti~ client, & both Richman & Lipton agree<br />
offer is too low . . .that eve . NY lawyers & investment bankers descend on<br />
Kraft corp . HQ in offices on 4th-6th floors given over to them as special<br />
communications lines strung & computer to link Glenview w/NYC/Kraft advisors<br />
begin piecing together the plan long discussed -- a recapitalization that<br />
ould ive sto olders a si i£i.cant dividen . .<strong>PM</strong> a been iscussa.ng<br />
a eover actics w assers ein irm since June . . .discussions w outside<br />
legal counsel re Kraft begin 10/11, process starts in earnest /each side<br />
gigimed it knew exactlv what the other would do next : "When you m.~' ow e<br />
r guy is as good as you are, ei~jus £Tin7c about what you would<br />
do in his place" said one adviser on the deal . . .b,y last Fri before decisive<br />
weekend, pric-e slipped off to $96 .50 as <strong>PM</strong> held of_f . . .<strong>PM</strong> WAS BETTING (1)<br />
Kraft didn- wan o go ru paln o~ se7 iT ng off parts of itself & (2) no<br />
other suitor would materialize . . .Kraft also good at playing the game, fiiling<br />
w/SEC its inte=t?q.~~, ~e~ ~.n asset sales gui~ ty,,.sending a messae<br />
'C"B"~'f7ti ii°°i`-~wanted-co ., ~`i-Es ante fast before desirable<br />
product lines were sold off//THE DEAL made while two CEOs were munching<br />
chocolate chip cookies for 3hrs<br />
http://legacy.library.ucsf.edu/tid/fmw44c00/pdf
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