Marriott Corporation and Project Chariot Essay -- Marriott Case Analys

Marriott Corporation and Project ChariotThe Marriott Corporation (MC), had seen a long, productive reign in the hospitality industry until the young 1980s. An economic downswing and the 1990 real estate crash resulted in MC owning newly positive hotel properties with no potential buyers in sight and a mound of debt. During the late 1980s, MC had promised in their annual reports to sell off some of their hotel properties and shorten their burden of debt. However, the company made little progress toward fulfilling that promise. During 1992, MC realize that financial results were only slightly up from the previous year and their major power to raise funds in the seat of government market was severely limited. MC was left with little choice, as they had to have some major changes inside the company if they wished to remain a successful business. Thus, J.W. Marriott, Jr., Chairman of the board and chairwoman of MC, turned to Stephen Bollenbach, the new chief financial officer, for ideas and guidance. Bollenbach, who had a reputation for creating forward-looking financial structures in the hotel industry, proposed a radical restructuring for MC. Bollenbachs proposal include breaking MC into two separate entities. The new company would restrain the service businesses of MC and have the financial strength to raise capital and take advantage of various investment opportunities. On the other hand, the venerable company would retain the hotel properties and the pressure to sell properties at reduced prices would be greatly lessened. This drastic restructuring proposal, deemed Project Chariot, had to be taxd by J.W. Marriott before he went before his board of directors with his ultimate recommendation. Thus, Marriott planned to review the companys past financial history that led to their current position evaluate Project Chariots advantages, disadvantages and value determine the bond endangerment involved if Project Chariot was accepted and finally consider o ption recommendations. Past History of MCBy the 1980s, the Marriot Corporation, founded in 1927, had grown into a financially sound, industry-leading corporation. Although MC went public in 1953 and continued to sell shopworn to the public, the Marriott family still retained the controlling interest of 25% of the company in 1992. Once J.W Marriott Sr. resigned in 1964, his son, J.W. Marriott Jr., took over the posi... ...th the restructuring proposed by Project Chariot. The anxiety team of HMC must aggressively restructure its finances in golf-club to alleviate this debt and reduce its risk of bankruptcy or take-over.Also, if possible actions should be taken to ease the worries of existing bondholders and institutional investors. Management may consider sharing the debt more equally between the two divisions in an apparent motion to prevent downgrading of the credit rating and loss of investors. ReferencesAnswers.com. Leveraged Buy Out. Retrieved July 17, 2005 fromhttp//www.ans wers.com/topic/leveraged-buyout spicy yield or junk bonds. Retrieved July 18, 2005 from http//www.finpipe.com/bndjunk.htm http//www.investopedia.com/university/mergers/mergers4.asp. Retrieved July 16, 2005.Ross, S., et. al. (2001). Corporate Finance. McGraw-Hill Companies. Yawson, A. (October 20, 2004). Performance shocks, turnaround strategies, and incorporate recovery Evidence from Australia. Retrieved July 18, 2005 from http//64.233.161.104/search?q=cache2aoQ4Wn2y8MJwwwdocs.fce.unsw.edu.au/banking/workpap/wp%252010%25202004.pdf+australian+strategies+corporate+restructuring&hl=en&ie=UTF-8