The Paragon group of companies PLC is a FTSE250 company
The Paragon group of companies PLC is a FTSE250 company with £10 billion assets under management. Paragon specialises in loan origination, loan servicing and the acquisition of assets. It is the United Kingdom’s leading specialist lender.
The senior management of the Paragon group of companies has chosen to raise additional long-term debt in the form of a corporate bond (retail bond). The bond will be sold by authorised offerors in multiples of £100 FACE value. A minimum initial investment of £2,000 is required per application. The bonds will mature in January 2022, and pay a coupon rate of 6.125% in 6 monthly instalments.
They will be available on the order book for retail bonds on the London stock exchange (LSE).
The paragon group of companies is one of several FTSE 250 companies who have chosen to issue corporate debt. The supermarket Tesco PLC issued a retail corporate bond in 2012 to finance its launch into retail banking in the United Kingdom.
You are currently an intern at Capstan, Peterston and Bennet ltd. Accountants specialising in providing comprehensive advice on gearing policies to companies . The company is experiencing an increase in the number of clients expressing an interest in corporate debt. As a result it has been decided to invite clients to attend a seminar to provide further information,.
a) You have been asked to produce a PowerPoint presentation together with notes to the slides which critically examines the benefits and risks to a company, of incorporating corporate debt into a an existing portfolio of equity and debt. (60%) Please note you will not be required to present the PowerPoint presentation
PLEASE NOTE THIS ASSESSEMENT IS NOT INTENED TO BE A CASE STUDY OF EITHER PARAGON OR TESCO. Each student will be expected to produce a PowerPoint presentation which is applicable to a wide audience and incorporate relevant theory, business models and empirical evidence considered necessary. (Reference can be made to either Paragon or Tesco as an aid to the evaluation).
(Please see over page for b)
b) In addition, the director acting as your supervisor whilst on internship, has asked you provide a short report which is to be made available on the company website and suitable for investors. You have been asked to provide advice on how the investor can manage both risk and return when selecting the companies in whom to invest. ( including reference to forms of risk, ratio/yield calculations and CAPM) (40%)
The numbers of reference for part A:15-20
The numbers of reference for part B: 10-15
The reference at least has these text books:
Corporate finance : principles and practice. 6th ed.
Watson, Denzil; Head, Antony;
Harlow, England : Pearson, 2013.
Corporate financial management. 5th ed.
Arnold, Glen;
Harlow : Pearson, 2013.
Note: To support the module, to provide a contextual background to the subject area and to underpin the topics covered in the learning pack.
Business finance : theory and practice. 9th ed.
McLaney, E. J.;
Harlow : Financial Times Prentice Hall, 2011.
International investments. , The Addison-Wesley series in finance
Solnik, Bruno H.; McLeavey, Dennis W.;
Boston, Mass. ; London : Pearson Education, 2003.
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