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Hi Sir,
Based on the answer of part (a), “Under option 1 $360 million would be used to repay the
outstanding medium-term loan notes and the balance as reinvestment within the business of $871 million. Option 2 would entail repayment of the loan and a share buyback. The value released would buy back $871 million/$4 = 217·75 million shares with a nominal value of $54·44 million and a charge to reserves of $817 million.”1.Can someone kindly explain why $360 million is used to repay the outstanding loans? How to get $360 million?
2. How to get nominal value of $ 54.44 million? is it using the increase in real terms of 4%?
Thanks in advance
1. If you look at the third paragraph under the second table of figures in the question (It starts “BBS Stores in currently financed…….”
then the second sentence says the the medium term loans of which 360M are repayable at the end of two year.2. The shares have a nominal value of 25c each (the same paragraph of the question as the one above). So since they are buying back 217.75M shares, the nominal value is 217.75M x 0.25 = 54.44M
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