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Intended for the unique use of A. BONTHA, 2015.
OCT 8, 2009
Blaine Cookware, Inc.: Capital Structure
Upon April 28, 2007, Victor Dubinski, CEO of Blaine Kitchenware, Inc. (BKI), seated in his office reflecting over a meeting he had had with an investment banker earlier inside the week. The banker, to whom Dubinski had known for years, asked for the conference after a group of private equity investors made discreet inquiries in regards to a possible acquisition of Blaine. Though Blaine was obviously a public firm, a majority of its shares were controlled simply by family members originated from the business's founders together with various family trusts. Family interests had been strongly represented on the panel of directors as well. Dubinski knew the family experienced no current interest in sellingвЂ”on the opposite, Blaine was interested in purchasing other companies with the food prep appliances spaceвЂ”so this overture, like a few others ahead of it, would be politely rebuffed.
Nevertheless, Dubinski was hit by the banker's assertion that the private equity client could " unlockвЂќ worth inherent in Blaine's strong operations and balance sheet. Employing cash upon Blaine's balance sheet and fresh borrowings, a private equity organization could obtain all of Blaine's outstanding shares at an amount higher than $16. 25 every share, its current inventory price. It could then repay the debt as time passes using the provider's future profits. When the bank pointed out that BKI itself could do the same thingвЂ”borrow cash to buy backside its own sharesвЂ”Dubinski had asked, " Nevertheless why will we do that? вЂќ The banker's response was straight-forward: " Mainly because you're over-liquid and under-levered. Your shareholders are spending a price for your. вЂќ In the days considering that the meeting, Dubinski's thoughts stored returning to a share repurchase. How various shares could be bought? At what price? Will it possibly sap Blaine's financial power? Or prevent it by making long term acquisitions?
Blaine Kitchenware's Organization
Blaine Cookware was a mid-sized producer of branded appliances primarily employed in residential the kitchen. Originally founded as The Blaine Electrical Apparatus Business in 1927, it developed then-novel electric home appliances, such as irons, vacuum cleaners, waffle irons, and cream separators, which were touted as modern, clean, and easier to use than alternatives fueled by simply oil, coal, gas, or by hand. Simply by 2006, the company's products consisted of a wide range of small kitchen appliances used for food and beverage preparing and for food preparation, including several branded lines of profound fryers, griddles, waffle irons, toasters, little ovens, food processors, mixers, pressure cookers, machines, slow cookers, shredders and slicers, and coffee makers. ________________________________________________________________________________________________________________ HBS Professor Timothy A. Luehrman and Illinois Commence of Technology Adjunct Financing Professor Joel L. Heilprin prepared the case solely being a basis pertaining to class discussion rather than as an endorsement, a source of main data, or an model of effective or ineffective management. The case, though based upon real events, is fictionalized, and any kind of resemblance to actual individuals or choices is coincidental. There are occasional references to actual companies in the frequentation.
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This document is approved for use just by ANINDITA BONTHA in MBAD 620 (Su15) - Case Studies taught simply by Juan Farrenheit. Cabrera, Ramapo College of recent Jersey by May 2015 to August 2015.
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4040 | Blaine Cookware, Inc.: Capital Structure
Blaine had just under...