wrigley

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Case Study:
Wrigley Jr. Company – Capital Structure

Case Problem:
The provident partner of Aurora Borealis LLC, a dodge fund that strategized to focus attached distressed companies, asked an associate to introduce the research for a potential investing. in Wrigley. Aurora specialized in finding opportunities for corporate restructures, to array significantly in the stock of the mark firm and then persuade management to restructure. They illustrious that Wrigley had about $13.1 billion in for the use of all equity and did not have a single one debt on their balance sheet. Chandler was asked to effect an analysis to support the assuming that Wrigley can borrow $3 billion at a credit rating of BB to B, to yield 13%.
Over the be unconsumed few years, Wrigley has had income growth at an annual compound estimate of 10% (earnings at 9%) that reflected the introduction of new products and from abroad expansion. The firm has always been conservatively financed and had store that was outperforming the S&P 500 composite index.
The proposed leverage recapitalization would have Wrigley borrow $3 billion and exercise it to an equivalent dividend or repurchase every equivalent value of shares. This could increase the value of the firm ~ means of shielding the cash flows from taxes. An extra assumption is the debt rating in favor of Wrigley, after they assume the shortcoming would they be able to manage the self-~ payments. How does Chandler know that a rating of BB/B would have ~ing likely. Additionally, Chandler knew that the greatest value of the firm would be achieved when the WACC was minimized. Repurchasing of shares would be changeable the amount of shares outstanding what one. could also have an impact without ceasing the amount of the Wrigley house’s voting control.
Chandler needed to render certain that her analysis covered all aspects of the restructuring and that she did not press close together the Wrigley family’s voting check if they opted not to take a bribe for any shares.
Analysis:
One of the considerations that Chandler...

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