Publications
Publications
- April 1996 (Revised January 2006)
- HBS Case Collection
Times Mirror Company PEPS Proposal Review
By: Peter Tufano
Abstract
Times Mirror Co. (TMC) owns a substantial block of Netscape common stock purchased prior to Netscape's IPO, on which it has substantial unrealized gains. TMC is restricted from selling the stock in a public offering and is therefore considering a proposal by Morgan Stanley to issue Premium Equity Participating Securities (PEPS) to monetize its Netscape holdings. These PEPS would pay interest quarterly and be redeemable in five years at a price tied to the value of Netscape shares, subject to certain formulas and call provisions effectively apportioning the upside in Netscape stock between TMC and the PEPS investors. The tax treatment of the PEPS, while unclear, is of significant importance.
Keywords
Risk Management; Stocks; Taxation; Corporate Finance; Telecommunications Industry; Media and Broadcasting Industry; United States
Citation
Tufano, Peter, and Cameron Poetzscher. "Times Mirror Company PEPS Proposal Review." Harvard Business School Case 296-089, April 1996. (Revised January 2006.)
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