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International Financial R.J. Reynolds International Financing (HBS 9-287-057) The case is set in the context of RJR's 1985 financing of its $4.9 billion acquisition of Nabisco Brands Inc. To finance the acquisition, RJR was proposing the issue of $1.2 billion of 12 year notes and the same amount in preferred stock. It had already funded $1.5 billion of the acquisition leaving $1 billion more to finance. Challenges facing RJR: Of the $1.5 billion that had been funded, $500 million came from cash and the remaining was through bank borrowings and commercial paper. These borrowings added to the debt that RJR had issued in 1984 and brought their debt ratings down to A. The remaining $1 billion financing would have to keep this in mind as well as the $1.2 billion of 12-year notes to be funded. To determine the financing, we need to consider the following choices: Debt vs. Equity: RJR is a...

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