II. Choose the best variant:
1. The reason why the owner of Westbeach Sports in Vancouver didn’t invest in the company is
a) the company filed for bankruptcy
b) it was time for it to become history
c) it was useless and unreasonable because of all losses.
2. McDonald was sure he would be out of job because
a) he was getting calls from headhunters
b) he figured that either the creditors or the marketplace would doom the company
c) buyers’ actions and the current situation were signalling that.
3. The risk factor for the company to be reorganized was
a) small number of emploees
b) lack of promotion and advertising in US market
c) high competitiveness of the sport’s market.
4. What was the feature of the sport’s market in the mid ‘90s?
a) big companies were ending up bankrupt
b) it was attracting new investments
c) the field was in need of experienced businesspeople.
5. Why were participants of the trade show reduced in number?
a) companies couldn’t face season-sensitiveness and time - sensitiveness of business they were involved into
b) orders on goods were cancelled
c) they failed in their attempt to compete with bigger companies.
6. Development of Westbeach trade is based on:
a) location
b) age category
c) apparel innovations.
7. Why is McDonald reluctant to reenter the U.S. market?
a) the list of weak points is too long
b) it is too expensive
c) the country is miles away.
III. According to the text, are the following statements true or false?
The company filed for bankruptcy in January and McDonald agreed to stay on, helping the trustee look for buyers for the Westbeach brand.
Snowboard apparel, once a cottage industry made up of several hundred tiny companies, is now a $137 million business in the U.S. alone and includes major players such as Burton, Quiksilver, and Billabong.
By the mid. '80s, the sport's popularity wasn’t skyrocketing.
On the production side, he moved manufacturing from China to Russia, where costs were lower and import duties and quotas more favorable.
The trio now runs a super-lean operation, with five-people departments for design, marketing, accounts payable, customer service, finance, logistics, and PR.
IV. Find the words in the text referring to the given definitions:
to deal successfully with
to cause smth to continue for more time then is required
very surprising
able to quickly return to previous conditions
smn who does dangerous things and takes risks
having had both successful and unsuccessful periods
dismissing from the job
to use borrowed money in order to buy a company.
V. Read the text and point out the main ideas which are discussed in it. Text II. Lawsuit Bursts Balloon Of Party-goods Chain
After losing its bank line of credit, party-supplies retailer K.G. Marx was hit with an unrelated shareholder lawsuit. Competition from discounters finally drove the company into bankruptcy.
When the party-goods retailer K.G. Marx raised $884,000 in an Ohio-wide public stock-and-bond offering, in the spring of 1995, it seemed that the chain's slogan--"the life of the party"--would be apropos for years to come. The company, based in Waterville, Ohio, near Columbus, unveiled heady plans to expand from five to seven stores in the area, and the future looked "hunky-dory," recalls the founder and former president, Mark L. Frendt.
The good times didn't roll for very long, however. Less than a year later the company's bank withdrew what prior to the public offering had been its only source of short-term funding, a $500,000 line of credit. That ultimately pushed the company into state receivership, offering it the chance to reorganize under court protection from creditors.
But in April 1997 one of the company's shareholders and two of its bondholders dealt K.G. Marx a stunning blow. They filed a lawsuit alleging that the company had neither adequately disclosed its financial condition at the time of the initial public offering nor spent the proceeds as the company had promised in its offering circular. For example, the fact that the company had failed to comply with loan covenants should have been highlighted prominently in the "risk factors" section of the circular rather than buried in a note to the financial statements, says the plaintiffs' attorney, Todd H. Neuman.
The allegations themselves were not unusual. They're typical of the charges that are leveled in the hundreds of shareholder suits brought against U.S. public companies each year. In the vast majority of the cases, however, the dispute is settled, claimants are paid off under the company's insurance policy, and everyone moves forward.
Frendt was not so fortunate. He had founded K.G. Marx as a supplier of food, bulk paper, and janitorial supplies in 1980 but had switched to selling party goods such as paper plates and crepe paper and renting items like china and tents for weddings and other occasions.
By the time of the IPO, sales were closing in on $6 million, and the company had shown a profit for all but two of its years. Money raised in the IPO, as spelled out in the offering circular, was to be used to finance inventory and fixtures for two new stores and to fund a sewer line and laundry facility for the rental division, with the balance going to augment working capital.
How the money actually was spent is in dispute. At least some of it presumably was spent as advertised, because the company did indeed open two new stores. But the plaintiffs allege that Frendt and the three other K.G. Marx directors spent money inappropriately, using some to pay off loans from Bank One Columbus to expunge a lien on Frendt's house. "All allegations in the lawsuit are incorrect," Frendt retorts.
As the company struggled against competition from discounters that opened stores near K.G. Marx's outlets, it lost $227,000 in 1995. With its line of credit gone--Frendt says he still doesn't know why, and Bank One won't comment--there was no way to raise cash for operations. Frendt began liquidating stores, finally closing the last three in mid-July as he entered Chapter 7 bankruptcy.
Now 45-year-old Frendt is out $140,000 in legal and other professional fees, and the litigation against him grinds on. He says he offered to settle before the point of no return was reached but was rebuffed. Neither side will say why. Even if the plaintiffs win, it's unclear whether they will see any money, because unlike most public companies, K.G. Marx didn't have directors' and officers' insurance.
VI. Answer the following questions:
What were the causes of company’s ‘death’?
What were the grounds for filing a complaint?
What were the wrong actions and mistakes of the company’s president?
What actions could company undertake to prevent the situation?
What will happen if the plaintiffs win?
VII. Put the events from the text in the chronological order.
1. State of receivership.
2. Company’s rise with long-lasting future.
3. Switching to another marketsphere.
4. Filing a lawsuit against the company.
5. Withdrawal of credit line.
6. Struggling against the competition.
7. Investing or wasting?
VIII. Match the words from the column A with the words from the column B. Use the expressions to make a brief report on the case of the K.G.Marx’s company.
A |
B |
stunning |
supplies |
heady |
policy |
janitorial |
covenants |
insurance |
fees |
professional |
plans |
working |
blow |
loan |
capital |
Listening
Explain the meaning of the following words:
privatisation, contract, portfolio, viable/afloat, speculate.
II. Listen to the recording about "Grown agents" company and agree/disagree with the following:
1. The Grown Agents' main function used to be trade with Britain's colonies.
2. The Grown Agents is a public corporation.
3. The Grown Agents used to manage the Brunei investment portfolio.
4. The Grown Agents earns about £4 million pa.
5. The government took over the Grown Agents in 1975.
6. The Grown Agents moved into investment management when they lost trade.
7. The Grown Agents supplies foreign governments with British goods which worth about £150 million.
8. Foreign governments like to deal with a private company and not a stateowned corporation.
9. Mr. Peter Graham has drawn up plans for reorganizing the Grown Agents.
10. Mr. Graham is selling the Grown Agents' London headquarters to bring their capital debt down to 10 million.
11. The Grown Agents will be completely privatised in 1986.
Speaking
Look at the charts and analyse them:
Writing
The transaction you were responsible for failed. Write a short report to the executive manager explaining what has happened. Give a short review of the situation, reasons for failure. Say what could be done to prevent the company from losses.