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Submitted by:
1. Ankan Mitra MP 13012
2. Shubhayu Sanyal MP 13056
3. V Satish MP 13066
4. Jasbir Singh MP13027
5. Kunal Ranjan MP13032
Case Study
Page 1
Unfortunately, internally generated funds for CTC were not sufficient to meet the requirements of the
expansion project. As a matter of fact, there are barely any internally generated funds as CTC had a policy
Case Study
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PROBABLE SOLUTION
Apparently, all the three levels of ADR were not in sync with the requirement of CTC. The ideal option
for Sr. Garcia to propose would be the ADRs under Rule 144A wherein the equity could be raised through
private placement of the ADRs and it would not require the registration and mandatory disclosure under
the GAAP. It was designed to serve a number of purposes including increasing the overall liquidity of
private placement securities. This would help CTC to connect with private investors having the
knowledge of the telecom sector of Chile. Further these securities have the advantage of trading over-thecounter. Since this option was likely to be available after June 1990, till such time Sr. Garcia may arrange
for short term borrowings through the local Chilean Banks to facilitate the initial cash flow to the
expansion program.
Though this route has a significant cost to company USD 200,000 400,000, the benefit from increased
liquidity and permission to place and trade privately among large, sophisticated institutional investors
would outweigh the cost.
Case Study
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