MCI's Financing Choices Free Essay

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MCI's Financing Choices

As a starter company MCI did not have a lot of options as to how they would finance themselves in the early years. Mid-year in 1972 MCI had initially sold 6 million common stock shares at $5 a share, which raised $30 million. Once expenses were taken out, MCI ended up with net proceeds of $27 million from this issuance. They then issued a line of credit from four banks worth $64 million. Finally they added $6 million of private debt. These three numbers together gave MCI approximately $100 million to get the company started. Keep in mind that about $70 million of this money was debt while the other $30 million was equity. MCI had no other choice but to have high debt because it was a starter company and no one had any reason to pur

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