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What is the problem at cumberland worldwide

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Reference no: EM133075147

1. What is the problem at Cumberland Worldwide? How did we get into this mess?

2. Compare the value of the various Cumberland securities to the value of the underlying assets. Be careful to consider both selling Cross River (and Cumberland) as well as fixing Cross River and operating it. Is the market optimistic or pessimistic? What does the market think will happen? Is the market expecting an asset sale, a Chapter 11 filing, or what? Assume:

a. Treasury bond rate is 8.5%

b. U is 0.8.

c. The sub debt receives $707 face amount of new zero coupon debt, not $1673

3. What do you think of the exchange offer versus the alternative of a Chapter 11 filing? I.e., who is going to vote for the exchange offer? Who is going to vote against it? Consider the positions of Cumberland's secured bank debt, unsecured senior debt, subordinated debt, preference stock, and common stock.

4. Should management alter the terms of the exchange offer? If so, how?

Reference no: EM133075147

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