Walt Disney Prospectus
#1 Disney offered a five-year bond at 4.5% for sale. These are classed as Global Notes and they were available in denominations of $2,000 minimum and $1,000 after the first $2,000. The notes cannot be redeemed prior to maturity, but the company can redeem at any time at fair value. These are fixed rate notes at 4.5% and they will be paid out semi-annually. The global notes means that they are cleared both in the United States and in Luxembourg, allowing the company to tap the European financial markets. One of the main underwriters, Deutsche Bank, is partly responsible for the European part of the issue. The debt is, however, wholly denominated in US dollars.
There are several steps that Disney undertook in order to enhance the marketability of the debt securities. First, the price and conditions of the issue need to be favorable for the market conditions. Second, Disney itself has to demonstrate that it is a low risk relative to the return, and it does this via a sound business model, good credit rating and demonstration of liquidity. The prospectus highlights each of these components.
The prospectus contains a number of different stock elements that any prospectus from a public issuer will contain. These include a description of the notes, which outline the terms and conditions of their notes, their issue, their redemption and payout. The company can make the issue more attractive to the market by offering fair market value and terms that are in line with market norms. If the offering is perceived as superior in some way, typically relating to the risk-return balance, then the offering is more likely to sell out. So Disney has to set the rate and the terms in line with market expectations at best, and possibly slightly better than market expectations, to ensure that the issue will be bought. The marketing of the issue in this sense might also include the choice of underwriter. For an issue this large it is important that the underwriter is able to buy a substantial portion of the issue, so that less of it hits the broader market. Not all $1 billion will hit the open market; and in some cases very little of it might if the underwriter is able to place a large percentage of the issue....
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