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funds. To offer an incentive to investors such as the companies assets as collateral, this offer risk to company as there’s potential they will loose partial ownership of assets, but this does come with benefits such as potential to offer lower coupon rate, this is a win for both Tuxedo Air and investors as they have peace of mind knowing if something happens to the company they can still obtain some of the companies assets. Recommendation:There are advantages and disadvantage offering bond for capital to help financial operations as there are risk as cover, the security of the bond—that is, whether the bond has collateral. the seniority of the bond, the presence of a sinking fund. A call provision with specified call dates and call prices. A deferred call accompanying the call provision, a Canada plus call provision. Any positive covenants. Also, discuss
Mini Case Analysis 26several possible positive covenants Tuxedo Air might consider. Any negative covenants. Also, discuss several possible negative covenants Tuxedo Air might consider. A conversion feature (note that Tuxedo Air is not a publicly traded company), and the floating-rate coupon. The advantages for companies who use bonds to raise capital for financial operations outweighs the disadvantage, as companies need to expand and grow thus, issuing bonds can help Tuxedo Air achieve their goals. By offering their assets as collateral they can have a low coupon rate, by putting their assets on the line. If Tuxedo Air decide to move into the public traded market they can consider convertible bonds, these can be converted into a predetermined amount of the underlying company's equity at certain times during the bond's life, usually at the discretion of the bondholder. Convertible bonds are a flexible financing option for companies and are particularly useful for companies with high risk/reward profiles. Reference:
Mini Case Analysis 27Ismailidou, E. (2016). Companies are having the hardest time selling their bonds in a decade. [online] MarketWatch. Available at: -companies-to-tap-in-a-decade-2016-02-25 [Accessed 7 Jan. 2019].Ross, S. A., Westerfield, R., Jordan, B. D., & Roberts, G. S. (2016). Fundamentals of corporate finance (9th Canadian ed.). Whitby, Canada: McGraw-Hill Ryerson.Sharper Insight. Smarter Investing. (n.d.). Retrieved from