1. Case Studies in Structured Finance
Sealed Air
Ian Giddy August 2000

2. Questions :
1. Why did Sealed Air undertake a leverage recapitalization ? Do you think that it was a good idea ? For whom ?
2. How much value was created ? Where did it come from ?

3. Organizational effects of leverage
Too little leverage
-waste of resources inside organization
Inefficiency
Too much scrap, capital expend.,
R&D
Too much leverage
-pushed to generate cash at the expense of value
-too little inventory
-not enough credit for customers
- skimping on quality, capital expend, R&D

4. Sealed Air's changing competitive environment
They had traditionally neglected manufacturing in favour of marketing. - able to do this because of a lack of competition
About a year before the recap, they launched a program of manufacturing excellence.

5. What to do with the cash ?
Understanding the Special Dividend Transaction
The Effect of the Recap on Firm Value and Performance
Change in Shareholder Value over the year following the Recap

6. High Leverage and Manufacturing Excellence
Organizational Effects of Leverage - already in
Changes in Organizational Priorities and Compensation
Turnovers in the Company's Investor Base
Implications of the case