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In MJ21 Q1, Estimate of Kawa Co equity value if demerger is undertaken. the Value attributable to equity was calculated as 75% of the total corporate value. Would you please clarify how the 75% was calculated.
The question says that Kawa will maintain its capital structure after the unbundling.
The part of the business which will become Kama is 24.5% of Chakula’s total equity value and so it 24.5% x 1,000/0.5 x $2.45 = $1,200.5
Kawa takes the loan notes B which have a value of $400.
Therefore the equity is 1,200 / (1,200 + 400) = 75% of the total value.