Case: Winfield Refuse Management, Inc.: Raising Debt vs. Equity
I. Case situation: Decision Proof: 1. First part: "..., it was Sheene's responsibility to lead the discussion on how to finance a major acquisition...reach a resolution this time." 2. Last part: "Board Discussion","However, there was decidedly less agreement on the matter of financing..." 3. The article is about background and arguments about whether to raising debt or equity.
II. Options: Funding the acquisition through a bond issue or common stock?
III. Creteria: 1. Maximum the interest of shareholders/not hurt the existing shareholders' interest. 2. Stable the stock price and make stock value growth. 3. Solidify its competitive
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How many shares did the company issue in the market?
"The Winfield family and senior management held 79% of the common stock." →The CFO missed the point about ratio of family control. $15 million family 80% = $11,850,000 others 20% $22.5 million family 52% = $11,850,000 others 48% → The family control would be weakened and it may hurt family interest if issuing stocks. What's more, if one of the family member sold his/her share, the Winfield Refuse Management, Inc would no longer be a family company.
"The management team had proven successful in the post-acquisition phase..." →The company
Non-employee family members shouldn’t be represented in this process, because it is a family business and only family members hold share.No sign shows this company wants to go public
5. What, if anything, could the foremen have done differently to help the group's conflict management and decision-making process?
Phyllis and Freddie can redeem the preferred shares at any time; the preferred shareholder still has control over the assets. If they qualify as a qualified Small Business Corporation, one can multiply the number of capital gains exemptions by increasing the number of taxpayers who are shareholders. In addition, Phyllis and Freddie can transfer the asset to the children to who they would like to appoint from their company. The growth in value of which will not be subject to a challenge of their Will under the Wills Variation Act. It can prevent future family disputes and help the estate equalization. When Phyllis and Freddie transfers the preferred shares to their children, it creates the commitment for the children to take over the ownership of the company. Phyllis and Freddie can also maintain control of the
11. Investors and creditors are particularly interested in this financial statement because it tells them what is happening to the company’s most important resource?
1. How does each article describe the nature of the problem, issue, or deficit you have identified?
Three interrogations were thus to answer. Should the company provide investors with classic bonds or give them the opportunity to convert them into equity? Should they structure the offer with a fixed or a floating coupon rate? And last but not least, where should they locate the operation?
2. What is the agreement arrived at by the end of the chapter? What can you infer from Pichot’s comments?
For the corporation that has acquired another company, merged with another company, or been acquired by another company, evaluate the strategy that led to the merger or acquisition to determine whether or not this merger or acquisition was a wise choice. Justify your opinion.
3. Evaluate Gordon Biersch's efforts to raise outside capital. What would you have done differently?
Address the following questions in a 4-5 page write-up of the Boston Beer Company Case to explore the issue of Initial Public Offerings.
What are the main ideas and/or issues of the article as it relates to the chosen topic?
The immediate issue is to make a decision on the future of the family company.
Address the following questions in a 4-5 page write-up of the Boston Beer Company Case to explore the issue of Initial Public Offerings.
3. What restructuring option – Icahn’s spin-off proposal or the company’s targeted stock proposal – will create the most value for shareholders? For creditors? For the firm’s other stakeholders?
With this sentence, members started to home in the idea that the nurse should take care of themself first to be effective in providing care to others. But debate continues in regards to which provision is more important, Provision 1 or Provision 5. At this stage, differences and supporting ideas between the provisions were discussed by the entire group. The group spent about 11 minutes discussing the two provisions. Each member appears to have equally responded at this stage with three responding 11 times while the remaining two, Diana and Marytess, answered 13 times each. It also appears that Diana and Marytess, although they appear to support Provision 5 at the beginning of this stage, still has conflicting support towards Provision 1.