In Mar/Jun 2016, question on Louieed, part b(comment on the impact of funding on EPS and gearing) , in the answer, the examiner wrote :
If all 5 of the major shareholders decide to realise their investment rather than 2, this will increase the cash required by $512 million = 25%*22.75*90m
Please help me to explain how to calculate 25% ?
Thank you.
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Mar/Jun 2016 - Funding requries for the acquisition
I would like to ask 1 more question:
Louieed Co's gearing prior to bid = 540/(540+(340*12.19) = 11.5%
Where does 12.19 come from ?
3y ago#2First question:
The company's founders own 45% of the shares.
For the third option is it thought that 3 of the founders who own 20% of the shares will take up the offer.
If all the founders take up the offer then that means 45% will take it up, which is an extra 25%.
3y ago#3Second question:
The calculation is shown in the first line of the answer to part (b) of the question.
Sorry my revision Kit does not have the line which shows the calculation of 12.19.
Could you please write the formular here?
Thank you.
3y ago#5The PE ratio is 14. Therefore the value of a Louieed share is $296m x 14 / 340m = $12.19.
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