Tightrope Limited (TRL) is a large public company with diversified operations in five different industries. Over the past decade, the company has generated significant cash flows from its operations. However, the company has paid out only a small portion of this cash flow back to shareholders. Management and the board of directors believe in retaining significant financial assets so that the company has funds available to make strategic investment and so that it can survive through tough economic times. For the years ended 2010,2011, and 2012 the company reported before-tax profits of $400, $450, and $380 million, respectively.
At the fiscal year-end of December 31, 2012, the company had the following investments.

TRL also has non-financial assets with carrying value of $2.0 billion on the balance sheet.
As of the end of 2012, the company had bonds outstanding in the amount of $1.5 billion with an interest rate of 8%. Of this amount, $300 million will need to be repaid on March 30, 2013. Other liabilities (accounts payable, etc.) total $400 million; these liabilities do not bear interest. This long-term bond includes the following two covenants:
i. TRL must maintain a debt-to-asset ratio under 50%, calculated at the end of each fiscal quarter. (For this ratio, the numerator includes all liabilities reported on the balance sheet, while the denominator equals total assets.)
ii. TRL must maintain an interest coverage ratio of 3:1, calculated at the end of each fiscal year. (For this ratio, the numerator is income before interest and taxes, while the denominator is interest expense.)
Should TRL violate either covenant, bondholders have the right to require the immediate repayment of the debt.
Required:
a. It is early March, 2013 and you are TRL€™s chief financial officer. Discuss alternatives and provide a recommendation to the CEO on how you would fund the debt repayment on March 30, 2013.
b. Evaluate TRL's current investment and financing policy and propose changes that would improve the company€™s financial position.

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Investment (in Smillions) Cash and cash equivalents Affiliates under significant influence (cost approximates carrying amount) Held-for-trading equity investments Available-for-sale equity investments Held-to-maturity debt instruments, purchased at par with average yield of 6%, five years remaining to maturity Total Cost Market value $ 50 $ 50 450 200 350 750 300 300 800 $1.850 500 $1,900