Question

You are the CFO of a sizable publicly-traded, multinational firm. Over the last 20 months, you've been working tirelessly to put together a deal for the construction of a very large manufacturing plant in Tokyo, Janapan. It's been quite a journey. You've spent weeks on end in Japan working with government representatives, architects, engineers and local contractors to get the project ready to go.  

Back here in ohio, you've also worked out the details on a $140,000,000 syndicated debt facility led by JP Morgan and they're ready to go with a construction loan. That, and another $70,000,000 of the Company's cash reserves will fund the project's total cost.

This morning, as usual, you're at your desk when the CEO walks down the hall by your office with what looks to you to be a distracted look on her face. She stops, looks at you and says: "This escalating tension between us and China over the Covid-19 pandemic. . .Should that impact our strategy to move forward on the project? Let's plan on having lunch in my office so you can tell me what you think."

Well, there goes the morning! What do you tell the CEO at lunch time?

Answer 1

Well it's quite understandable that prevailing COVID-19 scenario and likely reaction from major economies and our country's rising tension would affect the Company however rest assured in the long run, project would be very beneficial as most of our European and American allies are forcing thier companies to move production out of china and exports from china may come under tarrif barrier in these nations. Further, our governement may also impose certain tariff measure to block imports paving way for our company to capture the market share in domestic as well as export front. As you are aware, our government has announced recently stimilous package for moving factories out of china so this very well fits into our strategy.

As far as financing is concerned, our partner bank in Ohio and cash reserve of Company shall be sufficient. We must move and act decisively to capture the market at the earliest.