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contract that offered a substantial contingency fee of $3.7 million payable to Wasserstein Perella once City Capital rescinded their offer and only if a recapitalization was completed.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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The Wm. Wrigley Jr. Company: capital structure‚ VALUATION and cost of capital Introduction: Blanka Doborynin a managing partner of AURORA BOREALIS LLC tries to initiate a research for a potential investment in Wrigleys. They are trying to recapitalize the firm. Wrigley’s which is 100% equity financed has a market value of $13‚103‚000‚000 the question begins if it is totally equity financed is it running at its efficient level? Or Is it better to recapitalize the structure and thereby bring
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“The Blackstone Group: Merlin Entertainment” The Blackstone group‚ founded in New York‚ is one of the largest private equity firms in the world with offices in USA‚ UK‚ Germany‚ France and India. The Blackstone model of investment operation is to invest out of a singel global equity fund so all its investments around the world tap into the same capital pools. One of the most attractive industries to invest for the Blackstone is theme parks and there are a number of reasons for that. The first
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