5. You must decide:

• if the banks should take over the company

• if Danegelt should issue new shares to raise more capital

• if the banks should lend more money to Danegelt

• if Danegelt should go into receivership so the bridge can be sold to new owners

Fact sheet

The history of the bridge

Ten years ago	Decision taken by Danish government to build bridge
Eight years ago	Danegelt project chosen
Six years ago	First share issue, 50 crowns a share; building work begun
Five years ago	Share price rises to 60 crowns
Four years ago	Building costs double – rights issue at 45 crowns
Three years ago	Opening delayed by a year – share price drops to 30 crowns
Two years ago	Opening delayed by another six months – share price drops to 10 crowns; banks make loan to Danegelt
One year ago	Bridge officially opens – share price drops to 5 crowns
Six months ago	Figures for the first six months show traffic is 29% above forecast
Last month	Danegelt suspends repayments to the banks of its loans – share price falls to 3.50 crowns

Roles: Role a: The Chair of the Consortium of Banks

Chairing the meeting: You called this meeting as the representative of the largest creditor banks. You chair it and make sure everyone joins in. Organize the meeting in the following way:

1. Consider each of the four options open to you.

2. Ask each participant to give their view on each option.

3. Write the pros and cons of each option on the board.

A decision must be reached quickly because Danegelt is normally only entitled to suspend repayments for six months.

Your own point of view: Your consortium is the largest shareholder in Danegelt. You refuse to let Danegelt go into receivership, as this would mean the consortium having to write off much of the money you invested in shares and granted in loans. You also refuse to give any more loans to Danegelt, as they would then have even more difficulty repaying them.

The only solution you see is for the consortium to buy all the shares at their present price of 3.50 Danish crowns, and to reschedule Danegelt’s loan repayments. In this way you won’t lose any money, but will merely have to wait longer for it to be reimbursed. This solution would also enable the consortium to take complete control of Danegelt and, in time, get a return on your investment when the share price rises above its price of issue, which was 50 Danish crowns.

Role b: The Secretary of the Association of Danegelt Shareholders

You represent many shareholders, from big institutional investors to small individual investors. You refuse to let Danegelt go into receivership, as everyone you represent would lose heavily. This is because the price any buyers of the bridge might pay would in no way cover Danegelt’s debts to banks and shareholders. You also refuse a further issue of shares: the investors you represent simply cannot afford to put any more money into Danegelt; and such an issue would, in your opinion, lead to a further drop in the share price.

The only solution is to accept Danegelt’s suspension of its repayments to the banks for six months. After that, you propose that these same banks lend more money to Danegelt, and reschedule its debt. This will give breathing space to Danegelt, without costing the banks any money in the long run. You predict that, once this crisis is behind you, traffic using the bridge being higher than forecast, the share price will start to rise. This will benefit both the banks and the shareholders.