Restructuring options教案讲解.ppt

D. Restructuring options;In China, as far as foreign investment enterprise is concerned, there exist three main restructuring categories ;On the basis of favorable results of market and competitive analysis, option category I and II are most commonly used for companies’ long-term development;;At pre-selection stage, turnaround, sell out equity and freezing can be eliminated with killer criteria;;Some key problems of GSHA are closely linked to the Chinese partner. A clean break can only be assured by a separation;Key statement from some former GSHA employees on Mr. Cai (1);Key statement from some former GSHA employees on Mr. Cai (2);Although Lida’s products account for 52% of GSHA’s total sales volume, their actual gross profit margin is -7%. Meanwhile, Lida products’ sales volume sharply declined 60% from 1999 to 2000;The reason behind Lida products’ sharp decline is the change in government policy on residential building construction and the shrinkage in low end sanitary ware market;D2. In-depth evaluation;Cost, time, risk and potential impact on future integration constitute hard criteria in determining which option to choose;D.2.1 Equity buyout;Buying out Lida’s equity is favorable to future integration but the buy out price have to be agreed by Chinese partner;Providing Lida and Nanxiang agree on equity transfer, the whole transfer procedure consists of 3 major steps and last for 2~3 months;An equity transfer agreement must cover the following contents;For Geberit, the bottom line of buyout price could be determined on the basis of financial comparison analysis ;D.2.2 Termination;Generally speaking, termination is unfavorable to Chinese partner, however, it can be used in some cases to achieve the foreign partner’s objective very quickly (personal incentive) ;Compared to bankruptcy, termination generally has lower cost, shorter execution period and more simple procedure in liquidation;D.2.3 Bankruptcy;In view of cost, time, risk and future integr