Regina Company Case
I. Point of View
The group decided to look into the Regina Company case using the perspective of a financial analyst who will report to the Electrolux management and board. This decision was due to the following reasons:
1. Any further audit from the side of Regina, Electrolux or the SEC will only yield a similar result as the last audit thus being redundant and utterly useless
2. Looking at the case in the perspective of a member of the board of Regina will prove to be useless in evaluating the case since we will have no more say on anything that will happen in the company under the new owners.
3. The only perspective left is someone that will look at what happened in Regina Company, evaluate the events and the effects what happened and create recommendations on how to improve the company from within.
II. Case Context
The Company
The Regina Company is a manufacturing company specializing in electric vacuum cleaners and electric floor care products which started operating in 1910. It was then acquired by the General Signal Corporation but later elected to sell it off to some senior managers when they decided that manufacturing Regina’s products is not part of their long-range strategy. The company is originally set to be sold at $31 million but due to the leveraged buyout scheme, the buyers ended up buying the company whose worth $98 million in assets and annual sales volumes. Of the new owners, Donald Sheelen, the former marketing head and now newly named CEO of Regina Company, ended up owning 54% of the firm with an investment of only $750,000. Duly financed by bank borrowings and a promissory note to General Signal, Regina started its independent operations with a debt-to-asset ratio of 96%.
Business Highlights
For 18 months since acquisition, the company was financed by Sheelen and his associates, at the same time without any major changes implemented, the business recorded $67 million and $1.1 million worth of net income but in
The group decided to look into the Regina Company case using the perspective of a financial analyst who will report to the Electrolux management and board. This decision was due to the following reasons:
1. Any further audit from the side of Regina, Electrolux or the SEC will only yield a similar result as the last audit thus being redundant and utterly useless
2. Looking at the case in the perspective of a member of the board of Regina will prove to be useless in evaluating the case since we will have no more say on anything that will happen in the company under the new owners.
3. The only perspective left is someone that will look at what happened in Regina Company, evaluate the events and the effects what happened and create recommendations on how to improve the company from within.
II. Case Context
The Company
The Regina Company is a manufacturing company specializing in electric vacuum cleaners and electric floor care products which started operating in 1910. It was then acquired by the General Signal Corporation but later elected to sell it off to some senior managers when they decided that manufacturing Regina’s products is not part of their long-range strategy. The company is originally set to be sold at $31 million but due to the leveraged buyout scheme, the buyers ended up buying the company whose worth $98 million in assets and annual sales volumes. Of the new owners, Donald Sheelen, the former marketing head and now newly named CEO of Regina Company, ended up owning 54% of the firm with an investment of only $750,000. Duly financed by bank borrowings and a promissory note to General Signal, Regina started its independent operations with a debt-to-asset ratio of 96%.
Business Highlights
For 18 months since acquisition, the company was financed by Sheelen and his associates, at the same time without any major changes implemented, the business recorded $67 million and $1.1 million worth of net income but in