Question

In: Accounting

Amada Inc. is a leading Lebanese retail company that operates franchise concepts in fashion and accessories....

Amada Inc. is a leading Lebanese retail company that operates franchise concepts in fashion and accessories. It wants to expand its business internationally. The proposed expansion would require the firm to raise about $20,5 million in new capital. Because Armada currently has a debt ratio of 35% and because current shareholders already have all their personal wealth invested in the company, they would like to sell common stock to the public to raise the $20.5 million. However, the current shareholders want

to retain voting control The estimated pre-IPO value of equity of the company is about 72 million and there are 4.5 million of existing shares of stock held by current shareholders. The investment bank will charge a 7 spread.

1.To net $20.5 million, what is the total value of stocks that must be sold (approximately)?

2. What percentage of shares will the new investors require?

3. How many shares will the new investors require (approximately)?

4. What is the estimated offer price per share?

5. What is the total post-IPO value of equity?

Solutions

Expert Solution

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

Dear Auditor: Hi-Tech Fashion Inc. (“Fashion”) is a retailer of women’s clothes and clothing accessories. Fashion’s...
Dear Auditor: Hi-Tech Fashion Inc. (“Fashion”) is a retailer of women’s clothes and clothing accessories. Fashion’s operations are based in Seattle, WA, with retail stores located in the nearby suburbs and throughout northwestern United States. Fashion is actively developing opportunities to expand its operations in the surrounding region, including construction of several new retail stores in California. Fashion intends to complete construction and open new stores over the next four years. Fashion anticipates incurring significant expenses and making short-term cash...
You are a US company which makes fashion accessories, particularly fashion sunglasses. Recently you decided to...
You are a US company which makes fashion accessories, particularly fashion sunglasses. Recently you decided to expand the company internationally and you are going to start first in the European Union (EU) which is one of the worlds largest markets. You will both produce some products there and also sell some products there. Your forecast for next year is below. In the forecast, any item marked as an EU item is actually the US dollar equivalent of Euro which has...
Fashion Inc. (“Fashion” or “the Company”), an SEC registrant, is a fashion retailer that sells men’s...
Fashion Inc. (“Fashion” or “the Company”), an SEC registrant, is a fashion retailer that sells men’s and women’s clothing and accessories. As an incentive to its employees, the Company established a compensation incentive plan in which a total of 100,000 options were granted on January 1, 20X0. On that date (the grant date), Fashion’s stock price was $15.00 per share.   The significant terms of the incentive plan are as follows: The options have a $15.00 “strike” or exercise price (the...
Fashion Inc. (“Fashion” or “the Company”), an SEC registrant, is a fashion retailer that sells men’s...
Fashion Inc. (“Fashion” or “the Company”), an SEC registrant, is a fashion retailer that sells men’s and women’s clothing and accessories. As an incentive to its employees, the Company established a compensation incentive plan in which a total of 100,000 options were granted on January 1, 2020. On that date (the grant date), Fashion’s stock price was $15.00 per share. The significant terms of the incentive plan are as follows: The options have a $15.00 “strike” or exercise price (the...
Ivanhoe Inc. operates a retail computer store. To improve its delivery services to customers, the company...
Ivanhoe Inc. operates a retail computer store. To improve its delivery services to customers, the company purchased four new trucks on April 1, 2020. The terms of acquisition for each truck were as follows: 1. Truck #1 had a list price of $27,200 and was acquired for a cash payment of $25,500. 2. Truck #2 had a list price of $28,800 and was acquired for a down payment of $2,100 cash and a non–interest-bearing note with a face amount of...
Kingbird Company, a major retailer of bicycles and accessories, operates several stores and is a publicly...
Kingbird Company, a major retailer of bicycles and accessories, operates several stores and is a publicly traded company. The comparative balance sheet and income statement for Kingbird as of May 31, 2017, are as follows. The company is preparing its statement of cash flows. KINGBIRD COMPANY COMPARATIVE BALANCE SHEET AS OF MAY 31 2017 2016 Current assets    Cash $28,100 $20,000    Accounts receivable 75,000 58,300    Inventory 220,600 247,900    Prepaid expenses 9,100 7,000      Total current assets 332,800 333,200 Plant assets    Plant assets...
Chapman Company, a major retailer of bicycles and accessories, operates several stores and is a publicly...
Chapman Company, a major retailer of bicycles and accessories, operates several stores and is a publicly traded company. The comparative balance sheet and income statement for Chapman as of May 31, 2017, are as follows. The company is preparing its statement of cash flows. CHAPMAN COMPANY COMPARATIVE BALANCE SHEET AS OF MAY 31 2017 2016 Current assets Cash $?28,250 $?20,000 Accounts receivable 75,000 58,000 Inventory 220,000 250,000 Prepaid expenses ???9,000 ???7,000 Total current assets ?332,250 ?335,000 Plant assets Plant assets...
Bridgeport Company, a major retailer of bicycles and accessories, operates several stores and is a publicly...
Bridgeport Company, a major retailer of bicycles and accessories, operates several stores and is a publicly traded company. The comparative balance sheet and income statement for Bridgeport as of May 31, 2017, are as follows. The company is preparing its statement of cash flows. BRIDGEPORT COMPANY COMPARATIVE BALANCE SHEET AS OF MAY 31 2017 2016 Current assets    Cash $28,200 $19,800    Accounts receivable 74,500 58,200    Inventory 221,300 251,900    Prepaid expenses 9,100 7,100      Total current assets 333,100 337,000 Plant assets    Plant assets...
Company X currently operates in the retail industry. The company decides to acquire a company in...
Company X currently operates in the retail industry. The company decides to acquire a company in the pharmaceutical industry and a company in the retail industry with a higher cost of capital. Discuss the value relevance of this mergers and acquisition decision.
The Fashion Shoe Company operates a chain of women’s shoe shops that carry many styles of...
The Fashion Shoe Company operates a chain of women’s shoe shops that carry many styles of shoes that are all sold at the same price. Sales personnel in the shops are paid a substantial commission on each pair of shoes sold (in addition to a small base salary) in order to encourage them to be aggressive in their sales efforts.      The following worksheet contains cost and revenue data for Shop 48 and is typical of the company’s many outlets: Per...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT