March 11‚ 2014 Ladies and Gentlemen of the Board: In my experience‚ I have seen a steady decline in the use of debt financing. Upon closer inspection‚ I have noticed that your company uses no debt at all. As an experienced hedge fund manager‚ I am concerned that your management is missing valuable opportunities by excluding debt from your capital structure. My partner‚ Susan Chandler‚ and I have done extensive research on how undergoing a capital reconstruction process can benefit you in the
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FIN 5204 MANAGING CORPORATE CAPITAL INVESTMENT AND CAPITAL STRUCTURE FALL 2007 DEBT POLICY AT UST INC. 1. WHAT ARE THE PRIMARY BUSINESS RISKS ASSOCIATED WITH UST INC.? WHAT ARE THE ATTRIBUTES OF UST INC.? EVALUATE FROM THE VIEWPOINT OF THE BONDHOLDER. Over the years‚ UST has been a dominant producer in the tobacco industry‚ specifically the moist tobacco industry. Even though the past strategy with UST has entailed raising the prices of its products on a regular basis‚ the company still shows
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Debt Policy at UST Inc. Name: Siqi Han Student ID: 104116968 Professor: Yunbi An 1. Frame the issue. Briefly describe that UST is planning to reverse a long-standing conservative financial policy. In the 1990s‚ UST is a major manufacturer of moist smokeless tobacco‚ controlling 77 percent of the market. Smokeless tobacco products both snuff (dry and wet) and chewing tobacco (loose leaf‚ plug and twist / volume) categories
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Case Page 4. 3) Interco had retained Wasserstein Perella pursuant to a unique compensation contract that offered a substantial contingency fee of $3.7 million payable to Wasserstein Perella once City Capital rescinded their offer and only if a recapitalization was completed. Wasserstein Perella would receive $1.8 million for its services with or without this contingency fee. See George Anders and Francine Schwadel‚ "Wall Streeters Helped Interco Defeat Raiders But at a Heavy Price‚" The Wall Street
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77% of the smokeless tobacco market and also has very strong brand recognition. In terms of the bondholders‚ UST has a historically high dividend payout rate. There are a few reasons as to why UST is considering a leveraged recapitalization. If the leveraged recapitalization is implemented‚ the value of the company would increase because of the interest tax shield of $380 million. The tax shield will increase the free cash flows of the company‚ supplying UST with more capital to invest in new product
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years due to price challenge from smaller companies and has been experiencing slow growth rates due to lack of innovation in recent years. The investors had concerns regarding the future of the company and hence‚ the board has decided to take up recapitalization of capital structure. UST Inc. is the dominant producer of moist smokeless tobacco‚ or moist snuff‚ controlling approximately 77% of the market. UST Inc. primarily has the moist smokeless products as its premium products. It also has a secondary
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1. What are the primary business risks associated with UST Inc.? What are the attributes of UST Inc.? Evaluate from the viewpoint of credit analyst or bond holder. UST Inc. is a smokeless tobacco company with a long tradition and a recognizable brand name. A strong brand name can have lots of associations with high quality‚ revenues‚ soundness‚ growth‚ etc. But‚ this is one of the characteristics that can be like two edged sward. On one side‚ company with long tradition is expected to
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Debt Policy at UST Inc. Submitted By: Group O Manan Chandna (2012PGP068) Mohammad Sohail (2012PGP069) Priyankar Pandit (2012PGP081) Sayar Banerji (2012PGP090) Shruthi Kulkarni (2012PGP093) Shupriya Singh (2012PGP094) V. M. Sai Murali (2012PGP106) Q1) Evaluate the business risks of UST from the viewpoint of a credit analyst / potential bondholder. Conclude by rating the overall business risk of UST The factors that have an impact on the company’s business risk are very high single product
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CAPITAL MARKETS AND FINANCING SPR 13 | Group Assignment 1 | UST Case Study | 2/19/2013 | | | | Question 1: In order to calculate the impact of the leverage recapitalization on UST’s value‚ we used the WACC and APV methods to calculate its value before and after the recapitalization. WACC Method Using the WACC method‚ we first derived UST’s return on assets (rA). Since we are given the firm’s market capitalization‚ debt and cash‚ we calculated the current Enterprive Value
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transactions‚ and recapitalization) wanted to investigate a potential investment of $3B in Wrigley * Wrigley being an all-equity firm‚ significantly outperformed the S&P500 Composite Index * In terms of equity‚ Wrigley’s MV was 13.1B STATEMENT OF THE PROBLEM * Wrigley was an all equity firm who had a capital structure of 13.1B as I had previously stated * Their problem was to estimate the effect of a leveraged recapitalization. * By doing a leveraged recapitalization‚ this would
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