Memorandum To: Blaine Kitchenware Inc. Board of Directors CC: Mr. Victor Dubinski From: Date: 1/13/2013 Re: BKI stocks repurchase To review Blaine Kitchenware Inc.’s (BKI) current debt‚ equity and leverage levels with respect to the highly advisable repurchase of 14 million shares of stock at $18.50 per share and the related‚ necessary financing. BKI is currently highly over-liquid and under-levered. The firm can anticipate elevated tax rates due to the lack of debt held. BKI has also
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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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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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Do you believe Blaine’s current capital structure and payout policies are appropriate? Why or why not? According to the current situation‚ we think 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
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Evaluation on Share Repurchase Proposal of Blaine Kitchenware Inc. Group 7 Contents Executive Summary 3 Overview of problems 3 Analysis on Capital Structure & Payout Policies of Blaine 3 1. Inappropriate current capital structure and payout policies 3 2. Advantages and disadvantages of large share repurchase proposal 4 a. Effects of share repurchase on assets‚ liabilities and equity on balance sheet 5 b. Effects of share repurchase on debt ratios and interest coverage ratio 5 c. Effects of
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Possible Review Questions for the Blaine Kitchenware‚ Inc. Capital Structure Case 1. From reading the case‚ do you believe Blaine’s capital structure and dividend payout policies are appropriate? Why or why not? 2. Should Victor Dubinski recommend a share repurchase to Blaine’s board? What are the expected advantages and disadvantages of such a move? 3. We are not provided a precise share repurchase proposal from the case. Begin by considering the following one: a. Blaine
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Blaine Kitchenware is a company that has occupied the industry for over 80 years and continues to gain control in the market it occupies. As the CEO of the company‚ Mr. Dubinski is dealing with a challenging decision of determining what is best for the family company. He currently feels that the capital structure of the company needs adjustment. He is contemplating the idea of decreasing his equity while increasing his debt in order to increase the value of the company. Dubinski is attempting to
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UNIVERSITY OF NAIROBI SCHOOL OF BUSINESS BCOM DPS 202: FUNDAMENTAL OF SUPPLY CHAIN MANAGEMENT Practice questions on facility location/warehousing KitchenWare (case study) KitchenWare is a retailer of electrical kitchen items. The senior management team has decided to centralise and integrate the company’s warehouse operation into a national distribution centre warehouse (NDCW) to supply all of its retail operations across the country. Previously‚ each retailer had its own warehouse function
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Blaine Kitchenware is issuing stock to raise money for their business. BKI plans repurchase its own shares. This means BKI plans to invest into its own company. The company’s main issue is the fact that it is over liquid and under-levered and whether to distribute cash to shareholders by buying back shares or paying dividends. The answer is easy as this; BKI has to spend money to make money. Lucky for them they have the money and have more than enough to invest into their company. When BKI repurchase
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