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HSE_CASE_NR: 203-017 | status: active
Authors: Kallonen, Ari
Gasiorowska, Anna (supervisor)
Publication year: 2007  Language: eng
Keywords: company profitability; corporate treasury management; project financing; risk management; shipping industry
Abstract: Nordic Shipping Line (NSL), is in a process of purchasing a new vessel worth USD$ 80 million. NSL has two major decisions to make which both can have a significant impact on the company’s profitability. The first one is financing the deal and the second one is managing the potential foreign exchange risk that the deal creates. The company’s young and ambitious treasury dealer JJ has to produce relevant and justified proposals for the senior management who will make the final decisions based largely on his assessment and analysis. JJ decides he could use some help and calls his banking contacts to give their market analysis and recommendations. OBJECTIVES: This case describes a real and very common situation that corporate treasurers and risk managers face. The purpose of this case is to illustrate what kind of decision making is needed in a treasury organization of an international corporation. The key is to learn to go through the decision-making process and be able to understand and apply the available hedging tools. The case is suitable for MBA-level students who have completed their core financial courses and are pursuing the finance track or advanced level MSc. students. Courses that can benefit from this case include International Financial Management, Derivatives and Risk Management, Money and Banking or other elective finance courses, that deal with financing and financial risk management in an international environment.