A Bargain $60 Million Company for $240: A Case Examining the Impact of Convertible Debt, Warrants, and Anti-Dilution Provisions
This case presents graduate and advanced-level accounting students with the task of analyzing U.S. GAAP warrant accounting concepts in the context of Bohn Industries, a real company that after a decade as a public company was in financial distress. Faced with shrinking demand and poor economic condi...
| Main Authors: | , , , , |
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| Format: | Journal Article |
| Published: |
American Accounting Association
2017
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| Online Access: | http://hdl.handle.net/20.500.11937/53137 |
| _version_ | 1848759074307440640 |
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| author | Churyk, N. De Lange, Paul Mason, S. Gross, G. Stoettner, R. |
| author_facet | Churyk, N. De Lange, Paul Mason, S. Gross, G. Stoettner, R. |
| author_sort | Churyk, N. |
| building | Curtin Institutional Repository |
| collection | Online Access |
| description | This case presents graduate and advanced-level accounting students with the task of analyzing U.S. GAAP warrant accounting concepts in the context of Bohn Industries, a real company that after a decade as a public company was in financial distress. Faced with shrinking demand and poor economic conditions in the housing construction business, Bohn was forced to access the private equity market to raise much needed capital to continue its operations. The consequences of the investor protection clauses inherent in the loan agreements provide a useful lens to explore the implications and eventual takeover of Bohn for $240 plus the original borrowing, a bargain for a $60,000,000 net asset company. Besides encouraging students to research the technical aspects of U.S. GAAP relative to the accounting treatment of the loan, the case study provides insights into how accounting decisions are integral to the broader business environment. Specifically, the case highlights the conflation of economic consequences and aspects of contract law within specific provisions of the loan agreement in relation to anti-dilution stock provisions and preferential conversion clauses. Students will learn that accountants should act as business advisors, which requires the integration of knowledge from a range of disciplines. Students learn about due diligence relative to understanding the risks involved in certain contract clauses. |
| first_indexed | 2025-11-14T09:54:06Z |
| format | Journal Article |
| id | curtin-20.500.11937-53137 |
| institution | Curtin University Malaysia |
| institution_category | Local University |
| last_indexed | 2025-11-14T09:54:06Z |
| publishDate | 2017 |
| publisher | American Accounting Association |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | curtin-20.500.11937-531372018-02-13T00:22:56Z A Bargain $60 Million Company for $240: A Case Examining the Impact of Convertible Debt, Warrants, and Anti-Dilution Provisions Churyk, N. De Lange, Paul Mason, S. Gross, G. Stoettner, R. This case presents graduate and advanced-level accounting students with the task of analyzing U.S. GAAP warrant accounting concepts in the context of Bohn Industries, a real company that after a decade as a public company was in financial distress. Faced with shrinking demand and poor economic conditions in the housing construction business, Bohn was forced to access the private equity market to raise much needed capital to continue its operations. The consequences of the investor protection clauses inherent in the loan agreements provide a useful lens to explore the implications and eventual takeover of Bohn for $240 plus the original borrowing, a bargain for a $60,000,000 net asset company. Besides encouraging students to research the technical aspects of U.S. GAAP relative to the accounting treatment of the loan, the case study provides insights into how accounting decisions are integral to the broader business environment. Specifically, the case highlights the conflation of economic consequences and aspects of contract law within specific provisions of the loan agreement in relation to anti-dilution stock provisions and preferential conversion clauses. Students will learn that accountants should act as business advisors, which requires the integration of knowledge from a range of disciplines. Students learn about due diligence relative to understanding the risks involved in certain contract clauses. 2017 Journal Article http://hdl.handle.net/20.500.11937/53137 10.2308/iace-51894 American Accounting Association restricted |
| spellingShingle | Churyk, N. De Lange, Paul Mason, S. Gross, G. Stoettner, R. A Bargain $60 Million Company for $240: A Case Examining the Impact of Convertible Debt, Warrants, and Anti-Dilution Provisions |
| title | A Bargain $60 Million Company for $240: A Case Examining the Impact of Convertible Debt, Warrants, and Anti-Dilution Provisions |
| title_full | A Bargain $60 Million Company for $240: A Case Examining the Impact of Convertible Debt, Warrants, and Anti-Dilution Provisions |
| title_fullStr | A Bargain $60 Million Company for $240: A Case Examining the Impact of Convertible Debt, Warrants, and Anti-Dilution Provisions |
| title_full_unstemmed | A Bargain $60 Million Company for $240: A Case Examining the Impact of Convertible Debt, Warrants, and Anti-Dilution Provisions |
| title_short | A Bargain $60 Million Company for $240: A Case Examining the Impact of Convertible Debt, Warrants, and Anti-Dilution Provisions |
| title_sort | bargain $60 million company for $240: a case examining the impact of convertible debt, warrants, and anti-dilution provisions |
| url | http://hdl.handle.net/20.500.11937/53137 |