Tirstrup BioMechanics - Essay Example

Before venturing on the US turf, the company must be well prepared for taking on the competitors, with provision for financing the deficits, if any, initially. The US market requires a strong presence in Research and Development activities, which is basically a lock-in investment.At the moment the topmost priority for the company is to find out the finances at the most reasonable terms and conditions.While considering the Private placement debt option the company must not be unduly bothered about gaining explicit visibility in the public markets, because that is not going to have a big impact on the fortunes of the company as its products are not for the common consumer, which can be bought off the shelf for daily use.

For the business clients what matters the most is the quality and creditability. Business clients like to be dealt with directly and not through the public media.As for inviting proposals and ideas form financial institutions and giving them a vague promise if 'future business' doesn't make much of a sense if it does not form a well-established company with strong credentials in the target market.It appears that the company has ready cash of US$ 30 million, while another US$ 163 million is within easy reach provided Julie can present a formidable and convincing proposal before the Tirstrup's Board.

Issuing of equity has already been ruled out owing to the lackluster performance by the company's stock in recent times.Issuing commercial paper has some amount of uncertainty around it and sounds to be a costly proposition. The company will have to work hard for the A1/P1 rating with payment for the back-up line and there are also risks like re-pricing and re-funding. Such risks become more pronounced in today's volatile interest rate market. Creating fixed-rate funds out of variable-rate financing by interest rate swap works well (favoring the company) when the company is well established in the market and is in a position to dictate some of its terms, which is not the case with Tirstrup in the USA.

Issuing international bonds requires devoting a whole set of people and energy towards professionally managing, underwriting, and selling the bonds. Tirstrup can of course take the help of professional fund management firms, but that would entail further expenditure.RecommendationsConsidering the above-mentioned facts, it appears that Tirstrup will be better placed if;i. It pursues the sale of Swedish subsidiary Malmo Robotics to gain invaluable US$ 163 million. ii. Further explores the option of debt financing through private placements