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What is genuinely new in all this is not so much the idea of bundling risks, but the idea that transferring them changes the firm's structure and cost of capital.
ECONOMIST: Corporate finance
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Combined with a new, streamlined organization, a substantially improved cost base, a strengthened capital structure, and a more customer-oriented culture, we have all the right measures in place to create shareholder value going forward.
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While the impact of this debt burden was somewhat ameliorated in the near term by the carefully constructed payment-in-kind features, it is incompatible with achieving a competitive cost structure, funding sorely needed capital improvements and long-term viability.
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For instance, if the company looks to raise capital in debt or equity markets in the future, the new structure would allow investors to derive different growth and cost of capital assumptions leading to a higher combined valuation.
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