shareholder benefit. Is the proposed recapitalization the best response? There are two answers to this question. USG’s board debated a number of alternatives. They considered repurchasing additional stock‚ selling equity to a friendly third party or selling the entire company to a friendly acquirer. In fact‚ U.K. based BPB industries was a possible White Knight". However‚ analysts have also drawn attention to the fact that the proposed recapitalization would burden the company with debt‚
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Leveraged Recapitalization (1989) Case Study Abstract The following report outlines the basics of a leveraged recapitalization‚ the benefits and consequences of a leveraged recapitalization‚ and ultimately Gator Consulting’s recommendations for when and how to use leveraged recapitalization. Much of this discussion is explained by citing a case study involving Sealed Air Corporation as a way to demonstrate a specific positive instance in the use of leveraged recapitalization. Leveraged
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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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such diversification have served the Hershey School 10 years ago‚ for example? 3. Based on your valuation of HFC‚ do you feel the company was fairly valued by the market before the announcement of the sale? Are the Nestlé–Cadbury Schweppes and Wrigley bids fair to their own shareholders (i.e.‚ what needs to happen in order for these bids to create value for the bidding companies)? (Hint: use a discount rate of 7.5% for your analysis of HFC’s value.) 4. Which‚ if any‚ bid would you vote to accept
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operations from 1961-1965. The director defendant Philip K. Wrigley who owned 80% stock shares did not install lights at Wrigley Field so that the Cubs could not play at night when at home‚ even though the other 19 major league teams scheduled night games. Defendant (Wrigley) claimed that baseball is a day sport and that playing at night would adversely affect the surrounding neighborhood. William appealed a lawsuit against the director Philip K. Wrigley and other directors that their mismanagement of not
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Extra Sugar Free Gum by Wrigley ➢ Ecco Shoes ➢ Lacoste Polo Shirts 3. PRODUCT-1 1. Introduction 1. Product Name: EXTRA® was Wrigley’s first sugar-free gum offering in the U.S. and Extra gum is known for its incredible‚ long-lasting flavors that can trigger a state of perpetual enjoyment. Wrigley’s is the subsidiary of Mars incorporated‚ on October 6‚ 2008‚ Wm. Wrigley Jr. Company (NYSE:
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4) UST Inc. has paid uninterrupted dividends since 1912. Will the recapitalization hamper future dividend payments? UST Inc. has paid uninterrupted dividends since 1912. Assess the impact of the plan on UST’s $ dividend and dividend per share‚ assuming it continues to payout 64% of its earnings as dividends. Exhibit TN-6: Impact of Recapitalization on DividendsDebt = $1 BillionActual 1998Pro-forma 1999 No debtPro-forma 1999 Rd = 7.82Net Income467.9491442.56Shares185.5185.5158.42Earnings per Share2
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The company is considering a recapitalization where it will issue $1 million in debt and use the proceeds to repurchase stock. Investment bankers have estimated that if the company goes through with the recapitalization‚ it’s before-tax cost of debt will be 11%‚ and its cost of equity will rise to 14.5%. Assuming the company maintains the same payout ratio‚ what will be its stock price following the recapitalization? (Points: 8) After recapitalization: EBIT 1‚000‚000 Less Interest (1
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Case2: Leveraged Recapitalization Client: Sealed Air Corporation I.Executive Summary Founded in 1960‚ Sealed Air grew rapidly during its first twenty-five years because many products had strong patent protection. By the mid-1980s‚ the patent of air cellular had run out and competition was getting fiercer. The managers started to pay attention to manufacturing. Therefore‚ the Sealed Air launched World Class Manufacturing to promote manufacturing performance. After a year
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it’s uncertain that future research result will jeopardize the tobacco industry. E. There is a chance of a cultural shift against tobacco‚ and UST is unlikely to expand to international market. 2. Why is UST Inc. considering a leveraged recapitalization after such a long history of conservative debt policy? (Your answer should be more qualitative than quantitative!) A. UST wants to increase the
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