Loewen Group
The Retread Tire Company recaps tires. The fixed annual cost of the recapping operation is $60,000.The variable ,
October 7, 2020One of the useful aspects of a “machine is that it usually has a way to turn it on or off, and some more or less relatively easy controls to
October 7, 2020Loewen Group
Loewen Group
a) How was the Loewen Group able to grow explosively for the first half of the 1990s?
What were advantages of debt financing enjoyed by the firm in this phase?
b) How did Loewen get to the position it found itself in 1999?
c) Why do you think SCI was willing to offer Loewen such a substantial premium?
What incremental cash flows might SCI expect that could explain this premium?
d) Some might describe Loewen as “financially distressed.” Is this a fair description of
its problems? What are the manifestations and apparent costs of this so-called
financial distress?
e) What are Loewen’s alternatives? What would you recommend to John Lacey
