Transcription of INTER-COMPANY FUNDING Seeking a perfect structure
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INTER-COMPANY FUNDING Seeking a perfect structure
14 THE TREASURERCASH MANAGEMENT SUPPLEMENT ISPRING 2009cash managementINTER- company FUNDINGMost businesses are formed of groups ofcompanies which comprise a parent and itssubsidiaries, and much of treasury managementis about financing the overall group or theparent. But beneath the glamour of group FUNDING lies theissue of FUNDING its subsidiaries. Many of the same issues,such as the split between debt and equity and the length andterms of borrowing, arise for subsidiaries as they do for thegroup or parent. In this article we will refer to:nparent (the holding company for the group);nsubsidiary (any group company , whatever the level ofownership); andngroup (the parent and all subsidiaries, as defined above).
company funding and its importance for shareholder value. ... Subsidiary has a very low equity base Reduces the amount of capital at risk in the country and implies high debt ... Less than 50% ownership – ie,a joint venture (JV) JV partners only contribute group capital to the JV under the terms of the JV deal ...
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