Shlensky vs. Wrigley The case is about a stockholder named Shlensky who is suing the board of directors of Wrigley Field on the grounds of failure to install lights at the stadium. This is a claim of mismanagement and negligence by the directors. At the time of the case‚ The Chicago Cubs were the only major league team without lights on their stadium. Mr. Wrigley‚ the principal owner of the team‚ refused to add lights onto the stadium because he felt that‚ "baseball is a daytime sport and it would
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The William Wrigley Jr. Company Case Report Ying Suan Lo Julianne Mills Nick Lim Vinson Chen Glen Hamilton Table of Contents 1.0 1.0 Introduction Identifying opportunities for corporate financial restructuring was typical for Blanka Dobrynin‚ a managing partner of the hedge fund Aurora Borealis LLC. In 2002‚ with the then debt free William Wrigley Jr. Company (Wrigley) in her sights‚ she asked her associate Susan Chandler to conduct
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Wm. Wrigley Jr. Company: A Recapitalization Strategy Development Team: Sam Posnick Emily Booth Alex Fabisiak Sam Zarat 1 2 Scenarios To create a successful recapitalization plan‚ the group analyzed multiple scenarios and determined the appropriate level of debt to issue for the William Wrigley Jr. Company (referred to as Wrigley). The chosen capital structure is based on efforts to minimize the Weighted Average Cost of Capital (WACC) while also reducing increases in the cost of equity
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WACC before recapitalization Wrigley’s prerecapitalization WACC is 10.9%. The cost of equity assumes a risk-free rate of 5.65% for 20-year U.S. Treasuries (case Exhibit 7)‚ a risk premium is assumed 7% (or 5%)‚ and uses Wrigley’s current beta of 0.75 (case Exhibit 5). 4. WACC after recapitalization The increase in leverage will affect Wrigley’s WACC in at least three ways: 1. Cost of debt: Wrigley’s debt rating will change from AAA (consistent with no debt) to a BB/B rating reflecting
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INTRODUCTION * Wrigley has a one sided capital structure * Their interest rates has been at their lowest in 50 years * However‚ they have the leading market share in a stale low technology business * Blanka Dobrynin‚ the managing partner of Aurora Borealis LLC (a company who used a hedge fund to invest in companies who are in distress‚ merger arbitrage‚ change-of-control transactions‚ and recapitalization) wanted to investigate a potential investment of $3B in Wrigley * Wrigley being an
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Statement of the Problem: The William Wrigley Company is the world’s largest manufacturer and distributor of chewing gum. Over the preceding two years‚ revenues had grown at an annual compound rate of 10% and earnings grew 9%‚ these increases are a direct result of the introduction of new products and foreign expansion. As illustrated in the graphical diagrams in Exhibit 4 (appendix)‚ the company’s stock price had significantly outperformed the S&P 500 Composite Index‚ and performed slightly ahead
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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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Aurora Borealis hedge fund‚ considers the possible gains from increasing the debt capitalization of The Wm. Wrigley Jr. Company. Blanka suggests Wrigley raise the amount of $3 billion in debt of the capitalization while Wrigley has been conservatively financed and remained no debt at the end of 2001. This report is aiming to analyze whether Wrigley should use $3 billion debt recapitalization to either pay dividends or to repurchase shares. 2.0 Current Capital Structure Generally‚ firms can choose
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weighted average cost of capital was minimized. Thus she intended to estimate what the cost of equity and the wacc might be if wrigley pursued this capital structure change. The projected cost of debt would depend on her assessement of wrigley’s debt rating after recapitalization and on current capital market rates. WACC before recapitalization Wrigley’s pre recapitalization WACC is 10.9%‚ the cost of equity assumes a risk free rate of 5.65% for 20 years US treasuries in the case exhibit 7; a risk
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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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