Paramount Equipment

Case Solution

Carliss Y. Baldwin, Wei Wang
HBS Brief Cases ()

Paramount Equipment, Inc., based in Fort Wayne, Indiana, is a leading manufacturer of cranes and compact construction equipment, aerial work platforms, and hospitality equipment. Founded in 1987, Paramount now has production facilities in 24 countries. However, it lost its competitive position because it took on too much debt in the form of bank loans relative to the risk level of its business. Now the company must seek financing and guarantees to restructure its debt. Paramount’s future depends on whether existing lenders, management and the government of Ontario, where the company employs more than 7,000 people, can quickly reach an actionable restructuring and refinancing plan and whether Paramount has secured a capital injection of new investors. Students must determine the optimal capital structure policy in line with competitive risks and evaluate the instruments available to finance a company in financial need. The case requires limited quantitative analysis from students and is ideal for use in first-year MBA courses in financial strategy or corporate finance. It would also work well in advanced undergraduate finance courses that cover capital structure and financial emergencies.

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