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Q1 (b)
do you think the firm valuation was AFTER listing and paying off debt OR before it ?
I valued the firm assuming all the debt has been paid off, as it mentioned in the question….
“After listing the company can borrow at 7% but it chooses to have no debt”Q2 (a)
Discuss the different type of synergies.
Which of these types are relevant to the acquisition of Strymon co by Hal coQ2 (b) What is the premium on acquisition that Hal co would pay on the equity value of Strymon.
There were 2 methods to calculate equity value of Target co.
P/E method AND the other involved ROCE and using 3 years earnings into perpetuity or something, didnt know wtf that wasQ 2(c) Calculate the gain on a share of Target company in each of the following case
…Cash offer of $ 5.xx / share
….Cash offer of $1.x per share + 1 share of Hal Co for every 2 share of target co.
… Cash offer of $1.x per share + convertible bond of $100, paying 3% pA, for every $5 nominal value of target co shares. The loan is redeemable at par in 6 yrs OR convertible to 15 Hal Co sharesQ1 (a)
used MM model to calculate ungeared Ke of Competitor firm. It was 11%Q1 (b)
Used 11% calc above to dicount free cash flows before and after BAhari project. The firm value was around$ 550 Million. Value of Bahari project was calculated using APV method. It was around $ 10 M.Q1 (c)
Asked Whether the unsecured bond holders will accept the debt to equity swap or not.
The debt was 10 yr, 13% coupon, nominal value $40M (please correct figures if theyre wrong)
According to the swap these bondholders will get 10% of the co’s equity shares after listing.
10% of shares would be 550M x 10% = 55 M
This is to be compared against the Market value of debt. Which I calculated using 7% Discount rate.Q1(d)
Calculate the range of initial share issue prices assuming 100 million shares.
I simply divided 550M/100 = $ 5.5 per shareAssumptions in calculating share price.
Reasons why a company would want a listing on stock exchange.