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Walt Disney prospectus - Essay Example

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Undergraduate
Essay
Finance & Accounting
Pages 4 (1004 words)

Summary

This essay indicates the type of debt Disney offered to the public for sale and discusses the various approaches Disney incorporated to ensure successful marketability of these securities. Also, it lists the dollar amount of debt Disney proposed to sell to the public and indicates whether this amount has increased or decreased from 2008 to 2010. …

Extract of sample
Walt Disney prospectus

It is important to note that unsecured debt notes issued to public involves significant amount of risk for the company as well as the investors. This is because from the perspective of the customer, the interest rate may be too expensive. As a result, if the company is unable to generate sufficient profits, the company’s cost of borrowings will eventually exceed the revenues which will further increase financial risk of the company. The company has however kept these issues in mind and taken appropriate measures to minimize the impact of such undesirable consequences that might be followed after issue of unsecured debt by making the offer more attractive to customers. The company believed that if the offer would be attractive then more people will be encouraged to participate which will further ensure successful marketability of these securities. One of the initiatives taken by the company to increase the marketability of the securities was to reduce the entry load for joining the scheme. The minimum number of units required to subscribe by the people in order to join the scheme was reduced to five. In order to make the offer more attractive, the company allowed public to subscribe five units of shares at two hundred and fifty dollars for non-shareholders and they would be allowed to invest as low as fifty dollar per month. The company even kept the option of cash investment open for the investors. The company also lowered enrolment fee at an affordable price of $5-$10 per investor (Reuters, 2012). ...
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