Areva Case Study

Continued sale of assets, such as business units that were not core or minority stakes in other companies. In addition to keep the corporation on the right tract, by not having any debts or other stuff that goes with it, I would sell some minor parts of corporations that are not making that much capital in the corporation and does not play a major role in the system of it. Generally by making that move  they would avoid  the debt part, but also they would feel some empty spaces in the system that has been sold .Regarding the situation the minor parts that were sold  and risk for the benefit of the  corporation, can easily  be bought again once the corporation hits the sales roof.

Straight Government loan: Interest rates are generally determined by the market, but government intervention - usually by a central bank - may strongly influence short-term interest rates, and is one of the main tools of monetary policy. The central bank offers to borrow (or lend) large quantities of money at a rate which they determine (sometimes this is money that they have created) which has a major influence on supply and demand and hence on market interest rates. Interest payments must be paid through the time of the loan, and principal payment must be paid back at the end of the loan.

Equity Purchase: Those who purchase equity instruments (stocks) gain ownership of the business whose shares they hold (in other words, they gain the right to vote on the issues important to the firm). In addition, equity holders have claims on the future earnings of the firm. In contrast, bondholders do not gain ownership in the business or have any claims to the future profits of the borrower. The borrower’s only obligation is to repay the loan with interest

AREVA started to struggle greatly with debt. They hit a crisis and had to find a way out of it and make some money to pay it off. One way would be to start selling shares of their company. It is a risky thing to do since you are in a way opening to the public but it is also one of the best ways to make money. If they could get a big enough amount of money from selling shares it is a good way to pay off their debt. This could lead to new public ideas and might help the company greatly with all the investors pouring in with new ideas and a lot of money. In my opinion this is a good solution since they are in a tough position and need to make some money fast.

Since the AREVA is entering recession a good option would be to increase sharing the cost of investment with partners. AREVA’s income is shrinking and they need to overcome these crises. They have already sold noncore assets and have cut costs, but that is not enough. Idea to share cost with the investors is a pretty good idea, because they are short with money and in order to succeed they must continue with investments and new project, and hope that new project will earn them desperately need money.