Leveraged Recap

2) Although there is more shares, the Earnings after taxes are now higher due to the lower variable costs, which compensates for the increase in earnings based on the same 1,000,000 units at $30. Also the bigger part of the 14M invested, 10M was financied with issuing of

a) We calculated the total value of AirThread (before considering any synergies) by subtracting the value of the non-operating assets from the going concern value. This gave us a total value of $6237.85.

However, it is important to remember that the APV valuation and the option valuation calculations in Exhibit 1 and 3 aren’t straight forward comparable, since APV assumes financing the acquisition with new $300 million debt and real option valuation is calculated assuming total equity financing. If the tax rate remains constant, the real option valuation could be performed by taking the present value of the tax shields into account. In this case the values obtained by real option valuation would be even higher than the ones presented in the table.

$10,644,800 / $2,271,400 = 4.69 Times Return on Common Stockholders’ Equity (2002) $647,645 / $1,928,960 = 33.58% Return

The amount that contributed capital will increase (decrease) as a result of recording this stock dividend is:

jumped from $7.4 million to $136.9 million. Reported earnings also leaped; from $.34 per share in 1986 to

The change in the growth assumption has significant impact on the stock price. Under the high estimate of growth rate 236%, the new price per share is $107.56. Under the low estimate of growth rate 35%, the new price per share is $2.36.

It also commenced the re-organization of the business and the markets. Although, everyone had a strong belief that company needs a new launch to take it out of the situation however till mid of 2007, they had no products. Additionally, the credibility of the CEO was

Common Share Value: Total market value of common share = price per share * number of pref. share = $25 * 100000 = $2,500,000

Because firm value will rise to $6,850.8 million immediately after the recapitalization announcement, original shareholders will capture the full benefit of interest tax shield since they are able to sell their stocks at a higher price. The new stock price is determined by dividing the value of the levered firm by the number of shares outstanding at the end of 1998. Since there were 185, 516,055 shares outstanding at year end 1998, the new stock price after the announcement of recapitalization would be $6,850.8 million divided by 185, 516,055, which is $36.93. Compared to the

Based on pro forma figures, stock price is expected to be almost $3 higher at a debt ratio of 70%. Given that most of our stockholders are institutional investors, a $3 increase is extremely significant when hundreds of thousands or millions of shares are owned.

It is determined that the company worth is $856,518 with a share price of $351.03 per value as per the discounting dividend cash flow valuation approach..In appraising the anticipated premerger performance of the company, the weighted average cost of capital is computed; the worth of the WACC for FVC is 9.2% as depicted in

A special dividend was paid to the shareholders of the company when Sealed Air Corporation borrowed the total common stock for a value of 90% of its market value. This was a program which was basically initiated by the management of the company for improving the product quality and improving the efficiency of the manufacturing processes of the company. The leveraged recapitalization was used as a watershed event and this was done successfully and purposefully by the management of the company.

* This increase is mainly because of the 26.74% increment in PBIT but the assets went up only by 21.66%.

The first objection is related to the fact that this is a totally new approach concerning dividend policy, and nobody can predict what is going to happen. We consider that this may have positive effects on share prices, especially taking in consideration that it will stabilise the market price of the company.