Help on Victoria Case

Topics: Net present value, Discounted cash flow, Cash flow Pages: 33 (3641 words) Published: November 17, 2013
UVA-F-1543
Rev. Mar 9, 2011

VICTOR CHEMI
RIA
ICALS PLC (A): THE MERSEYS
C
E
SIDE PROJ
JECT
Late one afte
L
ernoon in Jan
nuary 2008, Frank Grey
ystock told L
Lucy Morris “No one s
s,
seems
satisfied with the an
nalysis so far, but the suggested c
f
changes cou kill the project. If solid
uld
projects like this can’t swim past the corpora piranhas, the compan will never modernize.” l
t
ate
ny
r
Morris was plant manager of Vict
M
toria Chemi
icals’ Merse
eyside Work in Liver
ks
rpool,
England. Her control
ller, Frank Greystock, was discussin a capital p
G
w
ng
project that M
Morris want to
ted
m
.
ct
d
)
million
propose to senior management. The projec consisted of a (British pounds) GBP12 m ure
onalize the polypropylen production line at the Merseyside plant ne
n
expenditu to renovate and ratio
in order to make up for deferred maintenan and to ex
d
nce
xploit oppor
rtunities to a
achieve incre
eased
productio efficiency
on
y.
Victoria Che
V
emicals wa under pr
as
ressure from investors to impro
m
s
ove its fina
ancial
performa
ance because of the ac
ccumulation of the firm commo shares b a well-kn
n
m’s
on
by
nown
corporate raider, Sir David Benj
e
jamin. Earni
ings had fall to 180 p
len
pence per sh
hare at the en of
nd
2007 from around 25 pence per share at the end of 2006 Morris th believed that the time was m
50
r
e
6.
hus
e
ripe to obtain fund
ding from corporate he
c
eadquarters for a mod
dernization p
program for the
ide
—at
e
ved
til
k
everal
Merseysi Works— least she had believ this unti Greystock presented her with se questions that had on recently surfaced.
s
nly
s

Victoria Chemicals and Polypr
ropylene
Victoria Che
V
emicals, a major compe
m
etitor in the worldwide chemicals industry, w a
e
e
was
leading producer of polypropyle
p
ene, a polym used in an extreme wide var
mer
n
ely
riety of pro
oducts
(ranging from medic products to packagin film, car
cal
ng
rpet fibers, a automob compon
and
bile
nents)
and kno
own for its strength and malleab
a
bility. Polyp
propylene w essentia
was
ally priced as a
commodity.
The productio of polypropylene pe
T
on
ellets at Mer
rseyside Wo
orks began w propyle
with
ene, a
refined gas received in tank cars Propylene was purcha
g
s.
ased from fo refineries in England that
our
d
This case was prepared by Robert F. Bruner as a basis for class discussion ra b
s
ather than to il
llustrate effect
tive or
ineffective handling of an administrative situation. Victoria Chemi e
a
V
icals is a fictio
onal company reflecting the issues
facing actu firms. The author wishes to acknowledg the helpful comments of D Frank H. M ual
ge
Dr.
McTigue, the li
iterary
color of An
nthony Trollop and the fina
pe,
ancial support of the Citicorp Global Schola Program. C
p
ars
Copyright  20 by
008
the Univer
rsity of Virgin Darden Sch
nia
hool Foundatio Charlottesv
on,
ville, VA. All rights reserve To order c
l
ed.
copies,
send an e-m to sales@
mail
@dardenbusines
sspublishing.co No part of this publicati may be rep
om.
f
ion
produced, store in a
ed
retrieval system, used in a spreadshe or transmitted in any fo sy
n
eet,
form or by any means—elec
ny
ctronic, mecha
anical,
photocopyi recording, or otherwise—
ing,
,
—without the permission of th Darden Sch
p
he
hool Foundatio ◊
on.

This document is authorized for use by Derrick Hagman, from 9/19/2013 to 12/19/2013, in the course: FIN 437: Corporate Asset Management-- Chhachhi (Fall, 2013), Western Kentucky University. Any unauthorized use or reproduction of this document is strictly prohibited.

-2-

UVA-F-1543

produced it in the course of refining crude oil into gasoline. In the first stage of the production process, polymerization, the propylene gas was combined with a diluent (or solvent) in a large pressure vessel. In a catalytic...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Victoria Chemicals Essay
  • Victoria Chemicals Case Study Essay
  • Essay about Victoria Chemicals Case Analysis
  • MSFIN222 Case Victoria Chemicals Essay
  • Victoria Chemicals Case Essay
  • Essay about Victoria Chemicals
  • Victoria Chemicals Essay
  • Victoria Heavy Equipment Case Essay

Become a StudyMode Member

Sign Up - It's Free