Two investment bankers are preparing an offer to present to a potential client, Swiss chocolate maker Chocoladefabriken Lindt & Sprungli AG. The company has maintained a cash position equivalent to about 7.7 of sales, more than what most businesses require. The bankers decide to propose the chocolatier apply the excess cash to paying down short-term and maturing long-term debt, and then take on significant new long-term debt to create a tax shelter and buy back shares. In this case students consider the financial rationale for the proposal and examine Lindt's balance sheet and other data before analyzing what size of bond issue should be proposed.

Case id: 080314
Supplemental Material: Teaching Note, Excel Spreadsheets