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R J Reynolds

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Essay: R.J. Reynolds International Financing (HBS 9-287-057).

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I n t e r n a t ion a l Fin a n cia l R.J. Rey nolds I nt er nat ional Financing ( HBS 9- 287- 057) The case is set in t he cont ext of RJR’s 1985 financing of it s $4.9 billion acquisit ion of Nabisco Brands I nc. To finance t he acquisit ion, RJR was pr oposing t he issue of $1.2 billion of 12 year not es and t he sam e am ount in pr efer r ed st ock . I t had alr eady funded $1.5 billion of t he acquisit ion leav ing $1 billion m or e t o finance. Challenges facing RJR: Of t he $1.5 billion t hat had been funded, $500 m illion cam e from cash and t he r em aining was t hr ough bank bor r owings and com m er cial paper. These borrow ings added t o t he debt t hat RJR had issued in 1984 and br ought t heir debt rat ings dow n t o A. The r em aining $1 billion financing w ould hav e t o k eep t his in m ind as w ell as t he $1.2 billion of 12 - y ear not es t o be funded. To det erm ine t he financing, w e need t o consider t he following choices: Debt vs. Equit y : RJR is a m at ur e com...

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