Far Eastern Textile Ltd.: The SIZeS Offering

Far Eastern Textile, a major Taiwanese textile and telecommunications company, is considering its options for raising US$130 million in a new round of global fund raising. The options of a new common stock or long term debt issue are explored but specific attention is paid to an option raised by the company's investment banker. This option entails the issuance of an innovative convertible debt instrument which combines a zero coupon and a significant conversion premium over the current price of the company's common stock. The benefit and costs of a delayed equity instrument for both corporations and investors is examined, as well as issues regarding security pricing in different financial markets.