A diversified mid-sized manufacturer of kitchen tools contemplates a stock repurchase in response to an unsolicited takeover. The company must determine the. BLAINE KITCHENWARE Case Exhibit 1 Operating Results: . beta calculation is based on a constant capital structure 1 Un-levered beta is the . 年5月14日 Blaine Kitchenware:Capital Structure Summary: Blaine Kitchenware, Inc. was founded in and as a mid-sized producer of branded small.
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The company has been earning less profits and hence it is of the opinion of distributing the profits to shareholders instead of retaining it for further investments. Teaching note supplement software. Relevant information for decision: This shows that the company has been keen on less retention of money to further invest. Although inc.cwpital take dividend as an indicator for a company to succeed, they also expect dividend will be paid continuously at either stable or growing rate.
They also have to consider of the effect of the repurchase on various factors like the risks involved in raising a debt especially when they are large, very conservative and debt free.
Blaine Kitchenware, Inc is over liquid and under-levered. The Kitcheneare Centre is dedicated to advancing the case method worldwide, sharing knowledge, wisdom and experience to inspire and transform business education across the globe. Accounting essays Architecture essays Business essays Coursework Economics essays Education essays Engineering essays English language essays English literature essays. My account New to The Case Centre?
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A surplus of cash lowers the return on equity and increases inc.capiital cost of capital; also large amount of strutcure may offer incentives to acquirer to and also decrease the enterprise value of Blaine. There are three issues of senior unsecured notes, one floating rate note, one equity offering, and one convertible note. Technology and Operations Management.
In other words, Blaine does not fully utilize its funds. It means Bliane has large financial surpluses and play a bad financial leverage. Access this item You must be logged in to access preview copies.
Luehrman and David Lane This case consists primarily of excerpts from term sheets and prospectuses for six securities offerings made by US companies duringjust after the financial crisis and recession of Go to advanced search. Since Blaine Kitchenware is a strucure company with large portion of its shares held by their family members, they have a financial surplus, which decreases the efficiency of structude leverage.
Blaine is currently over-liquid and under-levered and their shareholders are suffering from structture effects. Dividend payout ratio 0. However, the company must guard itself from getting over-levered.
Keep up to date with email updates Pricing Shipping options Terms of business What’s available from us? Compare the two ways, Debt financing will produce the interest tax shield,simultaneously will produce moreinterestsandincrease the management risk Plan of action Our team choose that BKI ues its funds to repurchase shares. Attention is also given to the value of interest tax shields.
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Blaine Kitchenware Inc Exhibits Stephanie Zepeda | Stephanie Zepeda –
In response to an unsolicited takeover, Victor Dubinski must make decision whethe to take share repurchase to face the competitive pressures. Acquirers inc.capitxl pay way less than they originally expect to buy out the firm. As a non family member, the stock repurchase will make me more skeptical because the shares owned by the family is rising exponentially and hence making it more dominant.
In summary, in order for Blaine to keep its current payout policies, they must kitchenwage numbers of outstanding shares throughout share repurchasing. Finally, BKI had undertaken a strategy focused on rounding out and complementing its product offerings by acquiring small independent manufacturers or the kitchen appliance product lines of large diversified manufacturers The company carefully followed changes in customer purchasing behavior and market trends.
They should also consider things such their acquisition plans, their earnings per share and their dividend per share, ownership structure, capital structure and of incc.apital the reputation of the company in the market after the buyback.
Buyback of the shares using the surplus kitchenwarw and issuing debentures is beneficial for the company as it will give some degree of leverage to the company.
Although this will involve the company raising a significant debt, this will also give them complete control to the promoters.
Blaine Kitchenware, Inc.: Capital Structure (Brief Case)
There is a big question facing Blaine and that is why would their existing shareholders want to sell their equity back to the company? About this resource This Business essay was submitted to us by a student in order to help you with your studies.
All fields Reference no. However, concluding whether an unlevered inc.capitsl a levered capital structure is appropriate for a company largely depends on the industry debt equity ratio i.
Secondly, beginning in the s, Blaine gradually moved its production abroad. The return on equity will increase which will aid the family in better realizing value for their stake. Firstly, the company completed an IPO in Seeing the industry debt equity ratio, the company has kept itself unlevered and this was a bit costly as the cost of debenture is fast cheaper if we compare it with the cost of equity.
Essay UK – http: BKI has a substantialliquidity. Our work is high quality, plagiarism-free and delivered on time.