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Sun Brewing (a)

In: Business and Management

Submitted By ha82ha2005
Words 1038
Pages 5
Q1-1.What situation was Khemka family involve during the case?

SUN Brewing was founded in 1992 by Shiv Khemka with Nand, his father, and his brother, Uday.
The situation is set in March 1999, when the company was facing a major crisis.
In 1998, the family had been planning to raise a $200-$400 million through equity and debt offering for the company on the NYSE (New York Stock Exchange), in aim to finance major investments because of the increasing competition from international beer companies in the Russian market.
In August 1998, there was a massive devaluation of the rouble that led to a 90% decrease in the stock price of SUN Brewing listed on the Luxembourg stock exchange.
The proposed NYSE listings have then been cancelled and there is a $40 million bridge loan outstanding that now needs to be repaid.

Q1-2.What other options could they choose originally?

Bring another strategic partner (and idea originally dismissed because the family didn’t want their power over the company threatened)
Reinvest from the family pool (that option was highly overlook because the family already budgeted the project and they prefer to ensure a backstop reserve of capital for preservation and discipline, also for the family reputation.
Quit the business (seriously consider if the best options for them is to move on to new opportunities in other industries.

Q2.Why there are different financing ways in each period?

There are many different stages of financing and operating methods , we need to consider the different situation of environment the company such as economic factors, political factors, technology factors ,social factors and also the information of competitors.
(A) 1992 During opening of SUN(From family business)
At first, 100% financing came from SUN Trade International Ltd (STI), its own group company.
(B) 1993 (private placement)

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