SEMINAR IN FINANCE (TASK 2)
By: Alti Asri Asri Ladiba Disan – 00000004347 Carrina Chittra – 00000002182 Ignatius Mario – 130000!77 Ir"a D#$i %an#&aru – 00000000'70 Is$andi – 13000010 (i"olas )ulistio – 1300027!0
FACULTY OF BUSINESS AND ECONOMIC UNIVERSITAS PELITA HARAPAN KARAWACI 2017
Roch Ho!"#$% A%& F'$"#$% Th $$ch Ac*'#+##o$ B,c-%.o'$" In *uly 2008+ )$iss ,har&a-#uti-al -o&,any .o-h# /olding A .o-h# &ad# an o#t to a-uir# all r#&aining outstanding shar#s o 56)6 biot#-hnology l#ad#r #n#nt#-h or 5)D8! ,#r shar# in -ash but si &onths lat#r+ #uity &ar"#ts do$n 3 so th# o#r b#-a&# 5)D8'6 ,#r shar#6 %o ,ay th# d#aloo+ .o-h# n##d#d 5)D42 billion in -ash+ so th# &anag#&#nt ,lann#d to s#ll 5)D32 billion in bonds at 9arious &aturiti#s ro& 1 y#ar to 30 y#ars in di#r#nt -urr#n-i#s b#-aus# it -an not ully a9ailabl# through ban" d#bt6 In &id;#bruary 200!+ .o-h# $as r#ady to &o9# or$ard $ith $hat $as ati-i,at#d to b# th# larg#st bond o#ring in history6
Roch In 18!4+ )$is ban"#r ;rit> /o&annLa .o-h#+ ?oin#d Ma Carl %raub to ta"# o9#r a s&all a-tory on Bas#l=s r#n>a-h#rstrass# ro& druggists Bohny+ /olling#r @ Co6 %h# irst t$o y#ars+ /o&annLa .o-h# bought out his ,artn#r and #bt#r#d ;6 /o&annLa .o-h# @ Co6 in th# -o&&#r-ial r#gist#r and in th# #arly y#ars+ th# ,ri&ary ,rodu-ts in-lud#d sl##,ing ag#nts+ antis#,ti-s+ and 9ita&ins6 In 1!30+ th# -o&,any had alr#ady #,and#d to 3 -ountri#s and -ontinu#d in th# d#-ad#s ollo$ing th# )#-ond
M,.- Co$"##o$ )in-# -tob#r 2007+ $orld #uity &ar"#t ,ri-#s had d#-lin#d o9#r 4+ and &any o -o&&#r-ial and in9#st&#nt ban"s had ail#d6 Broad #-ono&i- a-ti9ity $as also a#-t#d6 #r had r#-#ntly agr##d to a-uir# #r l#nd 5)D226 billion ro& i9# ban"s and th# r#&aining 5)D46 billion through issuan-# o a -o&bination o -ash and sto-"6
Th Bo$" o//.#$% .oc++ .o-h# hir#d thr## ban"s as ?oint l#ad &anag#r or th# 56)6 dollar d#al ban- o A&#ri-a )#-uriti#s+ Citigrou, lobal Mar"#ts+ and *EMorgan and our ban"#rs or th# #uro and ,ound st#rling d#als Bar-lays Ca,ital+ B(E Earibas+ D#uts-h# Ban"+ and Ban-o )antand#r6 B#-aus# .o-h#=s bonds $ould b# ,ubli-ly trad#d+ it had to il# $ith th# a,,ro,riat# r#gulatory ag#n-i#s in th# -ountri#s $h#r# th# bonds $ould b# issu#d6 )i&ultan#ous $ith th# drating o th# do-u&#ntation by l#gal t#a&s+ th# und#r$riting ban"s= d#bt -a,ital &ar"#ts and syndi-ation d#s"s b#gan th# &ar"#ting ,ro-#ss6 %h# initial ,has# o this ,ro-#ss $as th# road sho$6 During road sho$+ th# &anag#&#nt t#a&s or .o-h# and th# ban"s h#ld initial &##ting $ith in9#stors ro& all o9#r th# $orld6 During th# road sho$+ ban"s r#-#i9#d ##dba-" ro& in9#stors on th# d#&and or #a-h tran-h#6 D#t#r&ining th# inal si># and ,ri-ing o #a-h issu# $as an it#rati9# ,ro-#ss b#t$##n th# in9#stors+ ban"s+ and issu#r6 %h# b#st o,tion or .o-h# $as a &i o a bonds at di#r#nt &aturiti#s and -urr#n-i#s6 .o-h# -an r#du-# #-hang# int#r#st rat# by &at-hing di#ring &aturiti#s and -urr#n-i#s to th# -o&,any=s o,#rating -ash lo$s in thos# -urr#n-i#s6 %o #nsur# that th# bond o#ring rais#d th# targ#t#d ,ro-##ds+ th# -ou,on rat# $as s#t to a,,roi&at# th# anti-i,at#d yi#ld6 ;ollo$ing &ar"#t -on9#ntions+ th# 56)6 dolar bonds $ould ,ay int#r#st s#&iannually and th# #uro and st#rling issu#s $ould ,ay int#r#st annually6In th# -as# o .o-h#+ i th# in9#stors sho$#d strong d#&and or th# oury#ar #uro tran-h#+ .o-h# -ould d#-id# to #ith#r issu# &or# at that ,ri-# or lo$#r th# -ou,on and ,ay a lo$#r int#r#st rat# on th# oury#ar #uro issu#6
Th $$ch D,! n *uly 21+ 2008+ .o-h# ,ubli-ly announ-#d an o#r to a-uir# th# 36! o #n#r#nt#-h=s outstanding shar#s6 %h# o#r ,ri-# o 5)D8! r#,r#s#nt#d a 1! ,r#&iu& o9#r th# ,r#9ious on#&onth shar# ,ri-#s or #n#nt#-h6 .o-h# &anag#&#nt b#li#9#d that #-ono&i#s ?ustii#d th# ,r#&iu& $ith an #sti&at# that+ ollo$ing th# transa-tion+ th# -&bin#d #ntity -ould r#ali># 5)D70 &illion to 5)D80 &illion in o,#rational #i-i#n-i#s6 ;ollo$ing th# o#r+ #n#nt#-h=s sto-" ,ri-# shot u, b#yond th# 5)D8! o#r ,ri-# $ith th# anti-i,ation that .o-h# $ould in-r#as# its o#r6 n August 13+ 2008+ a s,#-ial -o&&itt## o #n#nt#-h=s board o dir#-tors r#s,odn#d to .o-h#=s o#r and stat#d that th# o#r substantially und#r9alu#s th# -o&,any6 #d that .o-h# &ight not b# abl# to inan-# an in-r#as#d bid or th# -o&,any and th# shar# ,ri-# -ontinu#d to d#-lin# through th# #nd o th# y#ar6 n *anuary 30+ 200!+ .o-h# announ-#d its int#ntion to laun-h a t#nd#r o#r or th# r#&aining shar#s at a r#du-#d ,ri-# o 5)D8'66 %h# r#9is#d o#r $as -onting#nt on .o-h#=s ability to obtain sui-i#nt inan-ing to ,ur-has# th# shar#s6 %h# announ-#&#nt $as a--o&,ani#d by a 4 ,ri-# dro, o #n#nt#-h=s shar# ,ri-# to 5)D806826 #n#nt#-h $as a$aiting th# announ-#&#nt o th# -lini-al trial r#sults or s#9#ral o its n#t g#n#ration o ,ot#ntial drugs+ in-luding its ,ro&ising -an-#r drug A9astin6 %h# analyst o L##rin" )$ann+ Bill %ann#r+ $arn#d #n#nt#-h shar#hold#rs that th# sto-" $as o9#r9alu#d and that i u,-o&ing #n#nt#-h drug trials sho$#d &#dio-or# r#sults th#n th# sto-" $ould all into th# 5)D'0 rang# and h# #n-ourag# th# shar#hold#rs to ta"# th# sur# 5)D8'66 But th# analyst o Fa-h=s In9#st&#nt .#s#ar-h+ *ason (a,adano+ don=t "no$ $hy #n#nt#-h $ould t#nd#r th#ir shar#s or 5)D8'6+ $hi-h is only 10 abo9# today=s ,ri-#+ $h#n th#y -an g#t -los#r to 5)D! to 5)D100 i th#y $ait6
Th F#$,$c#$% P.oo+,! i9#n o th# o$n#rshi, stru-tur#+ .o-h# $as or-#d to inan-# th# d#al #ntir#ly o d#bt and -urr#nt -ash on hand b#-aus# th# -o&,any -ontroll#d by #ri+ /o&an+ and sa-h#r a&ili#s and it &aintain#d t$o -lass#s o shar#s+ b#ar#r and ,roit,arti-i,ation shar#s6 Both shar# -lass#s had #ual #-ono&i- rights and trad#d in th# )$iss )to-" G-hang#+ but th# b#ar#r shar#s $#r# th# only shar#s $ith 9oting rights and th# ounding a&ily -ontroll#d o9#r 0 o it6 In th# #9#nt .o-h# $#r# to issu# #uity to #n#nt#-h shar#hold#rs+ this dual-lass shar# stru-tur# o$uld ha9# to r#9isit#d+ and th# a&ily &ight los# -ontrol6
'+#o$+ 1 Wh, ,. h 3'+#$++ ,$" /#$,$c#$% .#+-+ ,++oc#," 4#h h ,c*'#+##o$ o/ $$ch5 I+ h#+ , %oo" #6 o "o h ",!5
#n#nt#-h is a biot#-hnology -o&,any that r#s#ar-h#s ,ri&arily on d#9#lo,ing ,rodu-ts su-h as tr#at&#nt o -an-#r and AID)6 .o-h# ar# loo"ing or$ard to a-uir# this -o&,any sin-# its b#n#it or holding strong#r ,r#s#n-# in th# 5) &ar"#t and &a"# it a l#ading -o&,any in t#r& o biologi-s &ar"#t6 M#an$hil# .o-h# is -onsid#ring ha9ing an a-uisition o #n#nt#-h+ $# ha9# a r#,ort o th# &ar"#t -ondition ba-" th#n6 %h#r# had b##n d#-lin# in #uity and th# -r#dit &ar"#t6 .o-h# n##d around H42 billion in bul" in -ash and ,lanning to s#ll H32 billion $orth o bonds6 As $# all "no$+ th# ongoing tur&oil in th# $orld inan-ial &ar"#t $ill in-r#as# th# -o&,l#ity o th# ris"6 Anoth#r ris" &#ntion#d is th# #n#nt#-h=s $illingn#ss to s#ll shar#s or th# r#du-#d o#r6 #n#nt#-h=s $illingn#ss to s#ll th# shar#s on r#du-#d o#r rais#d anoth#r ,robl#&6 Anoth#r inan-ial ris" is also asso-iat#d to th# inan-ial &ar"#t+ $hi-h is r#lu-tant to int#r#st rat#6 C#ntral ban"s ha9# had d#-id#d to lo$#r th# int#r#st rat# and th# &assi9# light to uality o global in9#stors &o9ing -a,ital to go9#rn&#nt s#-uriti#s6 <# assu&# that th# #-ono&i- r#-#ssion g#n#rat#s lo$#r trust l#9#l6
$orld #uity &ar"#t ,ri-# had d#-lin#d o9#r 4+ and ollo$#d by th# alling o -o&&#r-ial and in9#st&#nt ban"s6 <# -ould -on-lud# that th# &ar"#t un-#rtainty $as a--o&,lish#d by th# light to uality+ $hi-h $ould n#gati9#ly ##-t th# .o-h#=s d#al6 2 Do o' 3!#8 h 3o$" #++',$c 4#!! h,8 ,$ #6,c o$ Roch9+ 3o$" .,#$%5 : Wh, ,. h .8,#!#$% +.,"+ /o. $o$;Roch 3o$"+5 Do o' h#$- h+ +.,"+ ,. +#6#!,. o #$8+o.9+ .*'#." #!" /o. h Roch 3o$"+5
;irst $# ha9# to d#in# $hat ar# th# non.o-h# bonds6 ;ro& Ghibit 11 $# -an s## that th# non.o-h# bonds ar#:
Co6,$
S
%$56)6 dollard#no&inat#d Altria
BBB
A%@%
A
*ohnson @ *ohnson
AAA
M-#sson
BBBJ
(o9artis
AAK
Ei>#r
AA
)-h#ringElough
AAK
#ri>on
A
BBK
Gurod#no&inat#d Anh#us#rBus-h InB#9
BBBJ
I&,#rial %oba--o
BBB
*ohn D##r# )-h#ringElough ol"s$ag#n
A AAK AK
Eound st#rlingd#no&inat#d
Bay#r A
AK
I&,#rial %oba--o
BBB
%#s-o
AK
Graph 1. Spreads for non-Roche Bonds 600 AAA
500
A 400
AABBB+
300
BBB 200
BB-
100 0 0
5
10
15
20
25
30
35
;ro& Ghibit 12+ $# -an g#t th# inor&ation that .o-h# a AA -o&,any6 )o $# -an s## th# s,r#ads or AA -o&,ani#s ro& ra,h 16 %h# non.o-h# bonds ar# not si&ilar to in9#stor=s r#uir#d yi#ld or th# .o-h# bonds6 -ours# th# r#ason is b#-aus# th#r# ar# so &any 9ariation in th# ratings o non.o-h# bonds6 = Wh, #+ o'. +c#/#c .co66$",#o$ /o. h co'o$ ., /o. h Roch >;,.? 10;,.? ,$" :0; ,. US "o!!,. 3o$"+5
%h# -ou,on rat# is th# int#r#st rat# ,aid on a bond by its issu#r or th# t#r& o th# s#-urity6 Cou,on rat#s -hang#s $ill b# a#-t#d by basis ,oints and #d und rat#6 %h# -ou,on rat# is th# a&ount o int#r#st that th# issu#rs ,aid ,#r y#ar to th# bondhold#rs bas#d on th# a-# 9alu# o th# bond6
;#d ;und .at#
B a s is E o in t s
C o u , o n
0
202P100 2602
2602J062 2627
6
2
r a t #
1
0
0
6
2
204P100 2604
2604J062 262!
3
0
0
6
2
242P100 2642
2642J062 26'7
N Cou,on rat# -al-ulation or AJ rating O#ar
;#d ;und .at#
Basis Eoints
C o u , o n
r a t #
0
6
2
22'P100 262'
262'J062 261
1
0
0
6
2
22'P100 262'
262'J062 261
3
0
0
6
2
242P100 2642
2642J062 26'7
As $# -an s## or AA and AJ th# -ou,on rat# is al$ays in-r#asing6 And $# -an say that .o-h# is a good -o&,any in bonds b#-aus# o th# rating6 AA rating is said that th# -o&,any is in a good or s#-ur# ,osition6 )o th# high#r -ou,on rat# &a"#s b#tt#r r#turn and lo$#r &aturity is b#tt#r than high#r &aturity6 B#-aus# $# -an s## that th#r# is no big di#r#n-# b#t$##n y#ars or 10 y#ars6 )o I r#-o&&#nd to ,i-" th# lo$#r &aturity than th# high#r &aturity6 > Wh, 4o'!" o'. co'o$ ., .co66$",#o$ 3 /o. h 7;,. 3o$" #$ '.o5
A$,!+#+ < Rco66$",#o$
