Case 1 – Debt Policy at UST Inc. 1) UST is the dominant producer of moist smokeless tobacco‚ or moist snuff‚ controlling approximately 77% of the market. UST has been one of the most profitable companies in corporate America with low debt compared to other companies in the tobacco industry and the company has been recognized by Forbes in terms of profitability by achieving return of capital of 92.1%. Price elasticity of its products is also important while evaluating. Smokeless tobacco industry
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UST Case Study Steven Kinyon Phillip LeCheminant Ryan Makahilahila 1. UST has a long history of conservative debt policy. Briefly describe why UST is considering a recapitalization that involves issuing debt and repurchasing equity. UST has a long history of a conservative debt policy. However‚ in 1998 they reinstituted their share buyback program. This means that they intended to issue up to $1 billion in debt in order to repurchase equity. Their intentions in repurchasing equity are to maximize
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repurchase shares rather than the normal case of capturing expansion opportunities to strengthen cash flow. This is not going to be regarded favorable to debt holders since the debt coverage ability in terms of cash or collateral is not strengthened. UST is characterized positively by commanding market share position in the moist smokeless tobacco market‚ strong brand name recognition‚ premium product offering‚ pricing flexibility; negatively by lack of geographical and product diversification‚ market
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FNCE 201 Corporate Finance Prof. Fu Fangjian Due: the class in 4th week (10-14 Sep) UST Inc. is considering a debt-for-equity recapitalization. In the deal‚ UST will issue $1 billion debt to buy back stocks. In class we argue that an important determinant of a firm’s debt policy is the tradeoff between the tax benefits of debt and the costs of financial distress and bankruptcy. Mature firms generating positive and stable operating income are more likely to take advantage of the debt tax shields
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A 17- STORY hospital tower with a helipad‚ 1000 doctors trained in multi-disciplinary healthcare and four new health institutes‚ the UST Hospital (USTH) seems not only to have recovered financially‚ but is eager to reach for the stars. But is its P3 billion expansion plan simply too starry-eyed for comfort? Is it too ambitious? Yes‚ according to Dr. Cenon Alfonso‚ president and chief executive officer of USTH. He said that the P3 billion financing for the expansion came from a fixed-term‚ syndicated
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Summary UST Inc. has historically been one of the most profitable companies. Profitability stems from its commanding market share‚ strong name brand recognition‚ historical pricing flexibility‚ and growing smokeless tobacco demand. However‚ UST faces business risks including eroding market share‚ tobacco lawsuits‚ and reduction in innovation. UST Inc. is considering a leveraged recapitalization to help in shielding the tax‚ increasing the share price and eliminating idle cash and debt
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5204 MANAGING CORPORATE CAPITAL INVESTMENT AND CAPITAL STRUCTURE FALL 2007 DEBT POLICY AT UST INC. 1. WHAT ARE THE PRIMARY BUSINESS RISKS ASSOCIATED WITH UST INC.? WHAT ARE THE ATTRIBUTES OF UST INC.? EVALUATE FROM THE VIEWPOINT OF THE BONDHOLDER. Over the years‚ UST has been a dominant producer in the tobacco industry‚ specifically the moist tobacco industry. Even though the past strategy with UST has entailed raising the prices of its products on a regular basis‚ the company still shows signs
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Write about your intended research in not less than 500 words. Set out the problem that you want to examine or the central question that you wish to address and briefly explain the broad background against which you will conduct your research. Include a brief overview of the general area of study within which your proposed research falls Nowadays the only constant in the world especially in the business world are changes And enhancements. And the key to the success and survival of the company is
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something According to the Encarta Dictionaries. According to answers.com‚ Recapitalization is restructuring a company’s debt and equity mixture‚ most often with the aim of making a company’s capital structure more stable. Essentially‚ the process involves the exchange of one form of financing for another‚ such as removing preferred shares from the company’s capital structure and replacing them with bonds. Recapitalization in Nigeria banking sector‚ has built a solid foundation for Nigerian banks
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Shattering the myth about Rizal and the Pontifical UST Here are some excerpts from Fr. Fidel Villaroel’s study: Myth: Rizal complained about his grades in UST and was discriminated and treated shabbily by the Dominicans. Fact: 1. Rizal entered the UST in 1877‚ enrolling in the Pre-Law Course‚ which was made up of philosophical subjects. The course was commonly called metaphysics. He passed the course brilliantly with the highest grades in spite of his initial indifference to philosophy
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