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Essay / Research Paper Abstract
This 8 page paper considers the different options that are open to a company wishing to raise capital and applies the to the UK case of BT. The options include considering the recovery of monies owed, use of a share issue, bonds and debt and the sale of assets. The bibliography cites 11 sources.
Page Count:
8 pages (~225 words per page)
File: TS14_TEBTcappr.rtf
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Unformatted sample text from the term paper:
include the issues of shares, raising debt levels with bonds or loans, realisation of funds from the sale of assets and potential divestment. The UK firm British Telecom; BT Plc,
has used all o these methods in the past. The chequered history of the privatised company has seen the need for fund raising in order to compete and survive in
a fast changing industry it once dominated as a monopoly supplier. The revenues have been problematic, profits has been supported with the pricing structure to allow competition to develop, but
many of the protections which were in place to ensure smaller companies were able to develop and compete have now been lifted (Thompson, 2005). This, along with the need for
further investment as technology is changing the way the markets BT supplies is behaving and impacts on the overall financial structure of BT.
BT has a number of options, the way funding is raised needs to be cost effective and reduce opportunity costs. For example, funding in the form of debt may
be seen as positive where debt levels of low. Highly levered companies are often perceived as able to gain more value as borrowing usually occurs in order to enrich a
company and take advantage of opportunities to create more value for shareholders (Nellis and Parker, 2000). However, highly geared companies; companies with a high debt equity ratio may also be
seen as more risky investments as less of the company is owned by the shareholders (Elliott and Elliott, 2005). BT has sought
to reduce debt in the past, in 2001 the net debt had risen to more than ?30 billion (BT, 2007). This caused concern in the markets and there was the
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