Posted: March 8th, 2022
Using the attached answer the questions below. Please, include the Excel model along the written paper which can include some Exhibits. 1. Does Horizon have an operating problem or a financial problem? Based on the projections given in the case Exhibit 8, will horizon default on its debt in 2011? What interest coverage and leverage ratios do you estimate for 2011? Can Horizon become a viable company over the long term with the proper capital structure in place? 2. Explain the pros and cons for each of the three financial restructuring options. Of the three options, which do you prefer and why? What are the major risks that accompany your decision and how would you mitigate them? 3. If you were to go with Option 1 (issuing equity), how many shares would you need to issue? Assume that Horizon wants to raise $100 million in addition to the existing $524 million in the current capital structure ($330 million of convertibles and $194 million of senior credit facility). 4. Assuming that you had selected Option 3, how would you restructure the debt? Why would the current debt-holders agree to your restructuring plan?
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