Case Yell Group

* From the statement of AirThread case, we know that American Cable Communication want to raise capital by Leveraged Buyout (LBO) approach. This means ACC will finance money though equity and debt to buy AirThread and pay the debt by the cash flows or assets of AirThread.

Exhibit 3 highlighted comparison of performance of BBBY with its competitors. BBBY is out performing its competitors; its gross profit and net profit expressed in percentage of sales are much higher than other store chains. BBBY is turning over its inventory and assets to generate income at a better ratio than others. Sales per square feet of space ROE and sustainable growth rate are surpassing other players in the field. Due to all this company is getting superior price earning ratio (see exhibit 4 for reference)

To judge if a company is a good LBO candidate the following are very important factors: low levels of debt in the target, stable cash flows, excess cash on-hand, assets that can be used as collateral to raise debt and no major capital requirements to keep the business running on an on-going basis. Congoleum is an ideal LBO candidate because:

An analysis of a repurchase of stock for $400 million cash, and recapitalization to 80% debt-to-total capital by borrowing $1.27 million reveals that BBBYs return on equity will be 113%, return on assets 61% and an after tax cost of debt of 28%. ROE is > ROA and ROA > after tax cost of debt. With the 80% debt-to-total capital structure ROE exceeds the other two capital structure scenarios of no debt and 40% debt-to-total capital. While all of this looks great there are other considerations. The household and personal products industries debt to total asset ratio is 34.69% while BBBY debt to total asset ratio is at 44% ($1,270,000/$2,865,023). Increasing to this capital structure would also reduce shareholders earnings per share.

To judge if a company is a good LBO candidate the following are very important factors: low levels of debt in the target, stable cash flows, excess cash on-hand, assets that can be used as collateral to raise debt and no major capital requirements to keep the business running on an on-going basis. Congoleum is an ideal LBO candidate because:

A few weeks earlier, John M. Case, board chairman, president, and sole owner of the

It is important for stockholders to continuously re-evaluate their investments. Although some investors do this more frequently and thoroughly than others, the majority of shareholders do so at least once each year. Therefore, Torres’ desire to update her analysis in order to determine whether Costco was still operating efficiently makes perfect sense. After thorough examination, my analysis proves that Costco remains one of the industry’s leading competitors and there seems to be no reason for Torres to sell her shares as long as she wishes to retain holdings of a retail wholesale club in her portfolio.

The company lost money almost every year since its leveraged buyout by Coniston Partners in 1989. The income generated was not sufficient to service the interest expenses of the company which stood at $2.62B in 1996. From Exhibit 1, we can say that interest coverage ratio computed as EBIT / Interest Expense was 1.31 in 1989 and has been decreasing over years and currently stands at 0.59. This raises a question of how the company can meet its interest payments without raising cash or selling assets.

BWB views this financial structure as a viable way to promote long term growth, while providing the commitment to society promised in its mission statement.

Under the two circumstances presented, I recommend that Harriet Burns and Richard Irvine should finance the purchase of Harmonic Hearing Co. through the deal proposed by the private equity firm, Comet Capital. This proposal best aligns with Burns and Irvine’s goal to select an option that offers the “best combination of cost, expected return of their ownership interest and financial flexibility.” To evaluate the two alternatives, a comparison based on IRR was assessed. Harrison Price’s proposal, which relies almost entirely on debt financing, offers an IRR of 215.5% (Appendix A). On the other hand, Joe Fowler’s proposal, which consists of equity financing, offers an IRR of

This case raises many interesting questions concerning the record setting issuance of corporate debt by WorldCom, Inc. (“WorldCom”). Both the surprisingly voluminous structure of the proposed issuance and the foreboding macro-economic climate in which it was slated spark concerns over the risk and cost of the move. One of the first questions that must be addressed is whether WorldCom’s timing was appropriate. Next, the company’s choice of structure for the bond issuance must be analyzed. Finally, the cost of issuing each tranche of debt must be estimated in order to determine how much WorldCom is actually giving up to achieve the $6 billion in funds.

The main competitors of Harvey Norman Holding LTD is the group of J B HI-FI, who has declared a sales revenue from 2.73Bn to 2.96Bn as an increase of 8.3% (P.2, JB HI-FI annual report 2011), compares to the increase of 9% of Harvey Norman.According to the figure,it seems Harvey Norman is doing better than J B HI-FI, but the business segment for J B HI-FI is much less diversified than Harvey Norman, therefore, J B HI-FI is actually doing better in just viewing the computer and software segment.

Herman Miller is an American company that was founded in 1905 in Zeeland, Michigan as the Star Furniture Co. They are the major American company of office furniture and equipment. In 1919 Dirk Jan De Pree became the president of the company and renamed the company The Michigan Star Furniture Co. Then Dirk and his father Herman Miller buy 51% of the company in 1923 and renamed Herman Miller Furniture Company, and in 1960 became Herman Miller Inc.

1) Projections of growth rate of volume and stable price by Yell's management would probably too optimistic, because they were highly motivated by asking for a price premium to solve its heavy debt load. So both the growth rate of volume and the price were assumed to be overvalued, we need to give out our own projections. (see Exhibit 1)

In the second week of June, 1988, executives at BW/IP International, Inc. were assembling materials for a presentation they would make to their bankers on June 15. They recently had agreed to acquire United Centrifugal Pumps (UCP) for $18.5 million. UCP 's product line complemented BW/IP 's extremely well and the managers of BW/IP 's pump division were eager to combine the two. Nevertheless, BW/IP 's bank lenders were expected to be somewhat less sanguine. Only a year ago, in May 1987, they had lent $131 million to finance a $235 million leveraged buyout (LBO) of the company. BW/IP had performed according to expectations since then, but it still carried total