| Rosario Acero | Case Analysis | | | |
|
1. Based on the forecasts in Exhibits 6 through 11, how will the two financing alternatives affect the performance of the firm?
2. What are the principal risks facing the firm? Sales The majority of the company’s sales are to integrated steel producers who value relationships with their suppliers; however, Rosario Acero decided to pay sales personnel a straight salary in order to cut costs. Not offering a sales commission does not incent sales personnel to develop or maintain relationships with their clients which, in turn, puts their ability to gain more orders at risk.
…show more content…
* Callable - not until year 7. * Warrants - Issuance of non-detachable warrants provides no advantage to company, but provides an additional return to the holders given $1/share exercise price. In fact, dilution of existing shareholder ownership interest occurs if warrants are issued, equating to a minimum 15% share for the holder. This number could increase to 25% based on the potential to issue an additional 35,000 shares, which is dependent upon average NOI calculation for 1997 and 1998. Based on income statement projections, the average NOI for 1997 and 1998 would allow for an additional 25,325 shares to be issued equating to additional dilution of 7.5% (exh. 5). In total, it is expected that Este’s interest would decrease from 58% to 45.3%. * Covenants – minimum EBIT coverage ratio of 2.0x could be problematic in the event of a downside scenario. 4. As for a possible equity issue, would an offering price of $9/share be acceptable? No, $9/share is too low. DCF analysis shows value of company at $22.3MM (assumes 6% stable growth and 8.92% WACC) which equates to $96/share vs. implied value of $9.6MM based on $9/share offer price. Additionally, at that price, $7.5MM in proceeds equates to 833,333 shares and 78.15% of company. If a higher offer price were received, the existing shareholders could limit the dilution of their interests. Lastly,
For calculations of the acquisition price, the P/E is taken to be 8.6. The acquisition price is calculated by multiplying this value with the historical average of net income. Thus, the acquisition price comes out to be $186,215,800, which is $189,186,673 less than the enterprise value.
Convertible debt and debt with stock warrants differ in that: (1) if the market price of the stock increases sufficiently, the issuer can force conversion of convertible debt into common stock by calling the issue for redemption, but the issuer cannot force exercise of the warrants; (2) convertible debt may be essentially debt, whereas debt with stock warrants is debt with the additional right to acquire equity; and (3) the conversion option and the convertible debt are inseparable and, in the absence of separate transferability, do not have separate values established in the market; whereas debt with detachable stock warrants can be separated into debt and the right to purchase stock, each having separate values in the market.
Introduction: In this assignment I will be giving information the following point talk about each sales staff must do or be like when working for these different scenarios. Also I have included the sales technique out of four of them: Cold-calling, Face to face, Telemarketing and drop in visits. Also I have included their own personal interpersonal skills of what it takes to be a sales staff to be working for those scenarios, I have also included examples and relevant pictures.
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?
Our estimated cost of capital, 20.81%, is lower than Ricketts’ expected return, 30%-50%, thus the investment is worthy. However, it’s higher than other pessimistic members’ expected return, 10%-15%, making the decision more complex and requiring further valuation。
a) How many shares will the firm have to issue, assuming they issue the new shares at the current price per share?
This is the assessment of the historical and future performances of the two companies in order to fully project internal and external factors that will affect the forecasts. The purpose is to identify trends, year to year changes, in order to assess whether the two companies’ performance are stable or sporadic and highly volatile.
In the case of Assessing a Company’s Future Financial Health, the case concentration is on SciTronics, a medical device company, performance measures based on the organization’s three primary financial data sources in Exhibit 1 & 2. Utilizing the 9 steps of corporate financial system, I will be able to analyze the financial health of the company to assess whether it will remain balance over the ensuing 3-5 years. The measures are grouped by focusing on “Financial Ratios” such as: 1.) profitability measures, 2) activity measures, and 3) leverage and liquidity measures. Using the financial data sources, I would be able to make recommendations regarding SciTronics 126 million loan request.
2. What do the results say about how firms in this industry can deliver strong financial returns in different ways?
Based on your analysis above, make at least two (2) recommendations as to how each company could improve its working capital positions. Provide support for your recommendations.
In the year 1436 Dufay composed an isorhythmic motet named Nuper Rosarum Flores. Nuper Rosarum Flores was created to recognise the dome of the cathedral Santa Maria del Fiore built in Florence, designed by the architect Filippo Brunelleschi. (CW, 1994. Dufay's "Nuper rosarum flores", King Solomon's Temple, and the Veneration of the Virgin.) The melody of this piece is accompanied by imitations (cannon) by the other voices, at different speeds. This is what's known as a 'mensuration canon'. The other vocalists sing over the bottom lines in harmonies. Nuper Rosarum Flores has been notated so as not to rely on structure for crescendos but rather the vocalists had to add dynamics in themselves.
How much value do you expect to be created by operating improvements and capital structure changes envisioned by CD&R?
The current enterprise value is $41,335 million and the equity value is $34,455 million. According to yahoo finance, the shares outstanding of our company are 647.31 million, so we can calculate the stock price for next year is $53.23. It will increase in following years.
Q.3 Why Superior Improved Profitability during the period January 1 to June 30, 2005? How useful was the data in Exhibit 4 for the purpose of this analysis?
However, MacDowell Corporation believes that changing the relationship with San Fabian Supply Company will make it benefit more. On one hand, MacDowell has been marketing its products through an exclusive distributor only in the Philippines and the parent company wants to market the products same as in other countries. On the other hand, the demand for construction materials has decreased since the expansion of its plant in the Philippines before. MacDowell Philippines’ plant operating rate was very low, at only about 45% capacity, and the overcapacity plagued the company a lot. To get rid of this situation, MacDowell Philippines wants to increase sales and its new president believes that having more dealers can lead to more sales. So MacDowell wants to change the relationship with San Fabian Company in the