Restructuring Bulong's Project Debt

Benjamin C. Esty; Michael  Kane

Case | HBS Case Collection | July 2002 (Revised March 2003)

Restructuring Bulong's Project Debt

Abstract

Preston Resources, a small Australian gold mining company, bought the Bulong nickel mine for A$319 million in November 1998 and financed the acquisition by issuing a US$185 million (A$294 million) project bond. At the time, mining had been underway for several months, and construction of the processing plant was essentially complete. Almost from the beginning, however, a series of design and operating problems shut down production and required costly repairs. Although processing performance improved by late 2000, maintenance issues continued to plague the plant, and output remained significantly below forecast levels. This case, set in 2002, concerns the financial consequences of these problems, including a bond default in January 2000 and Preston's efforts to restructure the project debt.

Keywords: Finance; Projects; Restructuring; Bonds; Borrowing and Debt; Business Startups; Insolvency and Bankruptcy; Valuation; Mining Industry; Australia;

Language: English

Format: Print

20 pages

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Citation:

Esty, Benjamin C., and Michael Kane. "Restructuring Bulong's Project Debt." Harvard Business School Case 203-027, July 2002. (Revised March 2003.)

Teaching Note | HBS Case Collection | April 2019

The a2 Milk Company

Benjamin C. Esty and Daniel Fisher

The a2 Milk Company (a2MC) became the most valuable company listed on the New Zealand stock exchange in 2018 by capitalizing on a biochemical discovery related to the protein composition of cow's milk. Because many people find the A1 protein difficult to digest, and that protein may be related to other health problems (e.g., diabetes), a2MC sells dairy products containing the A2 protein only primarily in Australia and China. With sales of NZ$730 million in 2017 and a desire to grow, a2MC formed a strategic relationship with Fonterra, the world's sixth largest dairy company, in February 2018. But one month later, Nestle, the world's largest dairy company, confirmed that it had begun selling A2 infant formula in China and people speculated that it would start selling A2 products in Australia and New Zealand later in the year. a2MC's retiring CEO Geoffrey Babidge and newly appointed CEO Janyne Hrdlicka must decide how to respond to Nestle's entry. Can this successful entrant become an incumbent with a sustainable competitive advantage?

Keywords: Judo economics; Market entry; innovation; barriers to response; industry attractiveness; advantage horizon; sustainability; first-mover advantage; scope; strategy execution; strategic evolution; biochemistry; genetics; branding; commodity; milk; Dairy; infant formula; Farming; Porter's Five Forces; Market Entry and Exit; Disruption; Innovation and Invention; Competitive Advantage; Corporate Strategy; Value Creation; Competition; Brands and Branding; Five Forces Framework; Consumer Products Industry; New Zealand; Australia; China;

Citation:

Esty, Benjamin C., and Daniel Fisher. "The a2 Milk Company." Harvard Business School Teaching Note 719-428, April 2019. View Details

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Restructuring Bulong's Project Debt

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