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Question 1
Flamingo International (Flamingo) is a large international corporation, registered in London, which has business operations in many countries across the globe. Flamingo made a bond issue almost ten years ago which raised a total of 250 million US dollars. The bonds were issued on the London market at an interest rate of 6 per cent for a 10 year term. The bonds are are repayable in London in approximately three months time. Flamingo, has been making the interest payments when due but has not repaid any of the capital.
Flamingo borrowed the sum of 200 million dollars by way of a syndicated loan four years ago. This loan is for a term of 10 years, is in Euros and has an interest rate of 8% payable annually.
The directors of Flamingo require advice about what alternatives are available in relation to repayment of the bonds and financing new projects. The company has been very profitable in recent years and has http://www.ukassignment.org/daixieEssay/meiguoessaydaixie/built up cash reserves of approximately US$200 million. It has an excellent credit rating and is highly respected.
The directors want to embark on a new project which will require capital expenditure of at least US$300 million. This project will eventually prove to be very profitable but will not produce any income for at least five years.
Advise the directors of Flamingo about all aspects of these transactions giving careful consideration to any possible legal and commercial constraints. (3,000 words)
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Question 2
A choice of law clause is invariably included in both syndicated loan agreements and bond issues. Why is this and, in your opinion, is it necessary or desirable to do this? (1,500 words)
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