ICAB AL Corporate Reporting Practice Questions - ICAB CA Advanced Level Corporate Reporting (Bangladesh) Exam

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A Chittagong-based shipping conglomerate is evaluating a proposed BDT 3,000 million cross-border acquisition of a regional container terminal using Johnson, Scholes, and Whittington's SAF (Suitability, Acceptability, Feasibility) framework. The board notes: the terminal addresses key supply-chain bottlenecks (Suitability: High); projected post-tax IRR is 18% versus WACC of 12% (Acceptability: High). However, Bangladesh Bank foreign exchange remitting regulations cap outbound capital account investments, and local syndication debt covenants limit additional gearing. How should the advisor conclude regarding Feasibility?

The acquisition should proceed immediately because high Suitability and Acceptability automatically override regulatory constraints Feasibility is severely compromised due to foreign exchange remittance restrictions and debt covenant limits, requiring structural renegotiation or offshore financing solutions before proceeding Feasibility is high because the positive NPV will automatically convince regulators to waive all capital account restrictions Suitability should be downgraded to compensate for financial constraints while leaving Feasibility rated as high

Correct Answer:

Feasibility is severely compromised due to foreign exchange remittance restrictions and debt covenant limits, requiring structural renegotiation or offshore financing solutions before proceeding

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