Unisys Credit Problems Essay Example | Topics and Well Written Essays - 500 words

Unisys Credit Problems - Essay Example ch Unisys has invested will contribute to a greater loss if the company were to use them to remain liquid and be able to fund its operations with the ultimate consequence being a rights issue to finance the deficit. This situation has forced the company to rethink its position on the revolving credit facility which it operates with various funding institutions to the tune of $275 million. The idea is not to renew it and avoid the escalating interests due to such. This presents the company with the challenge of how it will be able to finance its operations and come out of the financial crisis. The management theory available for use by the firm is that what has to be done for the business to remain a float must be done. The company’s management will therefore review the available options and make crucial decisions on which ones are relevant so as to implement the most effective ones. The alternatives available at the disposal of Unisys are numerous but not with serious economic consequences. It seemingly must repay the debt of $300 million by the time of expiry of the revolving credit facility. Unisys can seek funding through issuing additional shares in the market (Malz, 2011). This might not be popular with investors since the market is already volatile and most people, especially companies in the debt market such as Bloomberg realize that Unisys has the most expensive borrowing costs compared to other IT companies such as Affiliated Computer and IBM. The other possibility for Unisys is to cut down on employment expenses by laying-off employees so as to reduce operating expenses (Harvard business review on crisis management, 2000). This will only aggravate the problem as most firms would be interested to know what the situation is like to warrant such a decision. It might also result into low productivity due to reduced manpower. The uncertainty that will be accompanied by such a move would cause distrust amongst many clients, possible clients and financers