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sir the other debt paid off of $1050m and incremental investment of $1200m were not deducted from FCF to equity, why? Or even the gain from selling off the manufacturing unit for $3288m for that matter. These are all gains accruing the equity holders so why not adjust the FCF to equity fro this?
doubt 2)
” By cancelling the VCOs’ unsecured bonds and repaying the other debt in non-current liabilities, an opportunity has been created for Chrysos Co to raise extra debt finance for future projects. Based on a long-term capital structure ratio of 80% equity and 20% debt, and a corporate value of $47,944m (Appendix three), this equates to just under $9,600m of possible debt finance which could be accessed. Since the bank loan has a current value of $1,800m, Chrysos Co could raise just under an extra $7,800m debt funding and it would also have $1,439 million in net cash available from the sale of the machinery parts manufacturing business unit.”
sir agian this paragraph is a part of the answer. And i do not understand where this net cash flow figure of $1439m is coming from?
I know you might have to take some trouble and do some calculations, but am really confused sir. I tried arriving at it several ways, but can’t fathom, where this is coming from.
The restructuring is a one-off exercise which will change the SOFP.
However the value of the company after the restructuring will be the PV of the then future cash flows.
For example, the extra investment of $1,200 is not in itself affecting the value (less cash and more assets) except insofar as it increases future cash flows.
As far as the $1,439 is concerned, I am afraid that I cannot sort out how that figure was arrived at. Fortunately there were no marks specifically for that figure 🙂
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