Abstract In April 2005‚ Wm. Wrigley Jr. company announced plans to issue $3 billion of debt. The conundrum that it faced was whether it should use the funds to repurchase shares or pay dividends‚ with both options having different implications on the firm. This report provides a comprehensive analysis of the firm‚ both before and after recapitalisation‚ in order to recommend a solution. It encompasses the appropriateness of the new debt level and Wrigley’s ability to service it‚ while also considering
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totaling $10 billion. Moreover‚ this “convert” would be the largest such single offering in history. The proceeds were earmarked to fund a variety of capital expenditures‚ research and development expenses‚ working capital needs‚ as well as a share repurchase program. The Merrill Lynch team had been working with MoGen’s senior management to find the right tradeoff between the conversion feature and the coupon rate for the bond. Maanavi knew from experience that there was no “free lunch” when structuring
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outstanding financial position of the company‚ Microsoft chose to implement a strategic planning initiative in which the company would repurchase its stock. The $40 billion program would result in increased quarterly dividends and a return to shareholders of close to $14 billion (Microsoft Corporation‚ 2009). In this paper‚ Team B will analyze the stock repurchase initiative of Microsoft. The team will describe the relationship between strategic and financial planning. Further‚ Team B will describe
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Kitchen (CPK)‚ a casual dining pizzeria started in California by co-owners Rick Rosenfield and Larry Flax‚ was faced with the decision to invest in a stock repurchase program. Led by Chief Financial Officer Susan Collyns‚ the financial team of CPK was reviewing the preliminary results for the second quarter to determine if the stock repurchase program would provide a significant financial leverage for the company. The goal was to determine if the company can maintain the necessary financial stability
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requirement but the stock repurchase program should not be recommended because the proposed repurchase price of $100 per share is more than the book value. In addition‚ the potential dividend savings are outweighed by interest costs of $118‚000 to finance the purchase. Chapter 3 Exercise 3-12 a. Purchasing its own shares means the payment of dividends. In the case of dividends‚ all shareholders are receiving cash in a proportionate manner. In the case of share repurchases‚ only selected shareholders
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How will a buyback of shares provide a “quick fix” for EPS (earning per share)? A buyback allows companies to invest in themselves. By reducing the number of shares outstanding on the market‚ buybacks increase the proportion of shares a company owns. Buybacks can be carried out in two ways: 1. Shareholders may be presented with a tender offer whereby they have the option to submit (or tender) a portion or all of their shares within a certain time frame and at a premium to the current market price
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on Torstar’s dividend policy‚ their repurchases and their strategy with regards to strategic acquisitions within their three business areas was composed. The memorandum included pros and cons as well as recommendations with regards to the issues to be discussed when the board gathered for their meeting. The dividend policy and the share repurchase strategy are the main issues since the institutional shareholders preferred Torstar’s historical share repurchases and historical dividend pay outs. Management
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VICTORIA’S SECRET EXECUTIVE SUMMARY Formerly called ’The Limited"‚ Limited Brands operates more than 3‚700 stores in the United States (Limited Brands Annual Report 2004). Its apparel segment includes The Limited Stores and Express. Its intimate products business‚ Victoria’s Secret (lingerie stores‚ catalogs and online business)‚ accounts for more than half of the company’s revenues. Its personal care product business includes Bath & Body Works‚ Henri Bendel (also
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business risk with the type of financing: equity‚ debt‚ or convertible debt. In that regard‚ MoGen presents the interesting financial challenge of needing a significant amount of funds for 2006 for a variety of uses‚ but particularly for its share repurchase plan‚ which was estimated as $3.5 billion for 2006. The case is designed for students who already have a basic knowledge of bond valuation and option-pricing principles. Because the case touches on both technical and strategic issues‚ it
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Hampton Machine Tool Company 1. Hampton Machine Tool Company was founded in 1915 and was based out of the St. Louis area. It was a manufacturing firm serving the automobile and aircraft industries. Due to the strong automobile market and defense spending for the Vietnam war‚ the company was seeing record production and profits through the 60’s and early 70’s. After that‚ the Arab oil embargo‚ the increase in the price of Gasoline and the then recession was taking its toll on the Company’s financials
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