Blaine Kitchenware‚ Inc.: Capital Structure Course in Strategic Finance University of Vienna‚ 2015 Mila Dineva‚ 1153546 Blaine Kitchenware‚ Inc. • • • • • founded in 1927‚ small appliances for kitchens Public company‚ mainly controlled by the family 10% of the $ 2.3 bill. market 1994 – IPO In the 90’s – moved its production abroad Financial figures • • • • Over-liquid and under-leveraged‚ no debt 2% sales growth 2003-2006 11% p.a. annual returns for shareholders 2004-2006 $53.6 mil. Net income
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OCTOBER 8‚ 2009 TIMOTHY LUEHRMAN JOEL HEILPRIN Blaine Kitchenware‚ Inc.: Capital Structure On April 27‚ 2007‚ Victor Dubinski‚ CEO of Blaine Kitchenware‚ Inc. (BKI)‚ sat in his office reflecting on a meeting he had had with an investment banker earlier in the week. The banker‚ whom Dubinski had known for years‚ asked for the meeting after a group of private equity investors made discreet inquiries about a possible acquisition of Blaine. Although Blaine was a public company‚ a majority of its shares
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BLAINE KITCHENWARE INC. Blaine Kitchenware was a mid-sized producer of small appliances primarily used in residential kitchens. By 2006‚ the company’s products consisted of a wide range of small kitchen appliances including deep fryers‚ griddles‚ toasters‚ ovens etc. Blaine had just under 10% of the $2.3 billion U.S. market for small kitchen appliances. For the period 2003 to 2006‚ the industry posted modest annual unit sales growth of 2%. In 2006‚ 65% of its revenue was generated from shipments
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Blaine Kitchenware Case Study Answers 1. ABOUT THE COMPANY Blain Kitchenware‚ Inc. (BKI)‚ founded in 1927‚ is a mid-sized producer of small appliances for residential kitchens. BKI has an approximate 10% market share of the $2.3 billion U.S. market for small kitchen appliances‚ with 65% of sales originating from the US market. The company is public since 1994‚ and the majority of the shares is controlled by the founder’s family (62% of outstanding shares)‚ who also have a strong representation in
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RATE F FINANC CE C CASE II Blaine Kitche enwar re‚ Inc. .: Capital Str ucture r e Grou up Mem mbers Shivam m Pitaria (3 336/50) Tanuj j Madan (37 76/50) Vinit Bansal (395/50) Yuvraj S Singh Bist (402/50) Q1 ‐ Is Blaine’s capital structure appropriate? Give reasons. Blaine’s capital structure is not appropriate because of several reasons. The biggest of them being not using debt financing. Without debt‚ Blaine is not realizing its true potential
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.tsoc noitargetni dna nwod- etirw yrotnevni ‚elpmaxe rof ‚tol a IKB tsoc evah sn oi tisiuqca esehT .htworg gniyortsed-eulav ni tsevni lliw yeht dna ‚eerf si latipac taht kniht dluow tnemeganam ehT .noitacollasim latipac f o sksir gib eb lliw ereht ‚hsac sulprus fo tol a sah ynapm oc eht fI – ksiR tnem tsevnieR .sreyub laitnetop cinagro fo daetsni seinapm oc llams f o sn oi tisiuqca m orf semoc htworg tnecer lla ‚IKB roF .stcejorp ot laed retteb a noi tisiuqca eht gnikam ‚n oillim 927 $ ot n oillim
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Blaine’s current capital structure and payout policies are not appropriate. capital structure： Blaine is currently over-liquid and under-levered. In this case‚ Blaine’s shareholders are suffering from the effects. Because Blaine is a public company with large portion of its shares held by conservative family members‚ Blaine has huge financial surplus and causes bad financial leverage. In other words‚ Blaine does not fully utilize its funds. Because the company is totally equity financed‚ there is no
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Blaine Kitchenware‚ Inc.: Optimal Capital Structure For this case study you will take on the role of the investment banker introduced at the beginning of the case study. A week following your first meeting with Mr. Dubinski‚ he has called to request your assistance with the analysis of a stock repurchase. He has operational experience‚ but little financial management experience (he does not have any debt on his balance sheet!). As a result‚ he needs your help convincing his board of directors that
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Blaine Kitchenware Inc‚ was founded in the year 1927 and is a mid-size player in production of branded appliances. It is a public limited company but is closely held company as most of the shares are held by family members. It has a decent market share of 10% of the overall industry size of USD 2.3 million. Upon analysis of current financial policy of the organization it is evident that Blaine Kitchenware is very conservative in its financial policy. Company has never borrowed debt‚ it is cash rich
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Blaine Kitchenware Inc. Looking at the Financial statements of Blaine Kitchenware Inc.‚ in the balance sheet in particular in this case‚ I would say that BKI is a highly over-liquid and under-levered company. In the balance sheet‚ Exhibit 2‚ Cash and Cash equivalents and marketable securities was $66‚557‚000 and $164‚309‚000 respectively. With such high cash balance and marketable securities at hand‚ BKI is not only risking its own growth but also risk turning away investors who may consider
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