【正文】 of a possible takeover for RJR Nabisco, its stock had traded at $. ? Thus, KKR offered mon shareholders a 41% premium over the firm’ s pretakeover value. ? To finance the buyout, KKR increased RJR’ s debt from $5 billion to $29 billion. 7 返回目錄 Financial Engineering Background 4 ? The new firm was structured as a series of holding panies. ? Each of these related entities had separate obligations, issued either in conjunction with the acquisition or, in the case of RJR Nabisco, Inc, the operating pany, carried over from the takenover firm. 8 返回目錄 Financial Engineering Part Two: Description of Securities 9 返回目錄 Financial Engineering Issuance ? In May 1989, RJR holdings Capital Corporation issued three nearly identical debt securities in connection with the leveraged buyout of RJR Nabisco by KKR – $ billion of 15percent paymentinkind subordinated debentures due 2023 (payinkind bond) – $ billion of subordinated discount debentures due 2023 (deferredcoupon bond) – $525 million of subordinated debentures due 2023 (cashpaying bond) 10 返回目錄 Financial Engineering 11 返回目錄 Financial Engineering 12 返回目錄 Financial Engineering Difference ? The major difference among the three securities is the form in which interest is paid. 13 返回目錄 Financial Engineering The difference 1 ? The cashpaying bond pays