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What are the investors alternatives to this act

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Reference no: EM133178666

Question - Twilight Capital Inc. is a large holding company that uses long-term debt extensively to fund its operations. At December 31, the company reported total assets of $100 million, total debt of $55 million, and total equity of $45 million.

In January, the company issued $11 billion in long-term bonds to investors at par value. This was the largest debt issuance in the companies history, and it significantly increase the companies ratio of total debt to total equity.

Five days after the debt issuance, Twilight Capital, Inc. filed legal documents to prepare for an additional $50 billion long-term bond issue. As a result of this filing, the price of the $11 billion in bonds that the company issued earlier in the week dropped to 94 because of the increase risk associate with the company's debt. The investors in the original $11 billion bond issuance were not informed of the companies plan to issue an additional debt so quickly after the initial bond issue.

Required -

Did Twilight Capital Inc. act unethically by not disclosing to the initial bond investor its immediate plans to issue an additional $50 billion offerings.

What are the investors alternatives to this act? Please explain.

Reference no: EM133178666

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