Detroit Motors’ Latin American Expansion.ppt

MINI CASE: Detroit Motors’ Latin American Expansion CHAPTER 11 INTERNATIONAL BANKING AND MONEY MARKET Background: 　　　It is September 1990 and Detroit Motors of Detroit, Michigan, is considering establishing an assembly plant in Latin America for a new utility vehicle it has just designed. The cost of the capital expenditures has been estimated at $65,000,000. There is not much of a sales market in Latin America, and virtually all output would be exported to the United States for sale. MINI CASE: 1 1990年9月，底特律汽车公司正在考虑到拉美简历一个装配厂，生产其刚设计出来的新型多用途汽车。估计所需的资本支出元。其实，这种汽车并不在拉美市场销售，而是出口到美国。 Reasons for establishing plant there Nevertheless, an assembly plant in Latin America is attractive for at least two reasons. First, labor costs are expected to be half what Detroit Motors would have to pay in the United States to union workers (工资是美国工会个人的一半）.Since the assembly plant will be a new facility for a newly designed vehicle, Detroit Motors expects minimal resistance from its U.S. union in establishing the plant in Latin America.（不会遭到美国工会反对） Secondly, the chief financial officer (CFO) of Detroit Motors believes that a debt-for-equity swap(债券转股权） can be arranged with at least one of the Latin American countries that has not been able to meet its debt service on its sovereign debt with some of the major U.S. banks（至少可以和一个无力偿还美国主要银行债务的拉美国家打成债券转股权的互换协议）. 拉美国家银行债务的价格（美分/美元） The September 10, 1990, issue of Barron’s indicated the following prices (cents on the dollar) on Latin American bank debt: Brazil 21.75 Mexico 43.12 Argentina 14.25 Venezuela 46.25 Chile 70.25 What is concerned by CFO? The CFO is not comfortable with the level of political risk in Brazil and Argentina, and has decided to eliminate them from consideration. (剔除巴西阿根廷） After some preliminary discussions with the central banks of Mexico, Venezuela, and Chile, the CFO has learned that all three countries would be interested in hearing a detailed presentation about the type of facility De