Blaine Kitchenware Assignment

Blaine Kitchenware, Inc. Optimal Capital Structure For this case study you go out take on the role of the investment banker introduced at the beginning of the case study. A week following your first meeting with Mr. Dubinski, he has called to request your assistance with the analysis of a stock repurchase. He has operational experience, but little monetary management experience (he does not have any debt on his balance sheet ). As a result, he needs your help convincing his circuit card of directors that the stock repurchase is a good idea. The board is more monetaryly conservative than Mr.Dubinski. Mr. Dubinski wants you to evaluate a scenario where Blaine Kitchenware, Inc. (BKI) will repurchase 14 million shares at $18. 50 per share. To do so, BKI will borrow $50 million at an interest rate of 6. 75% (this is your stake in the deal because your bank will make the loan). Consider the following questions that are likely to be raised regarding the analysis What effect does the pr oposal have on the balance sheet? How is run performance impacted? How are earnings per share and ROE impacted? How is leverage affected? How is interest coverage affected?What is the expected cost of financial distress? How is the cost of capital impacted? What happens to the family control of the business? For this assignment you should write a memo to the board of directors. Noneof these directors arewell penin finance and all are skeptical of using debt. Space dedicated to explaining leverage concepts in layperson terms and the calculations involved will try to be very germane(predicate) and well received. Board members are also looking for advanced analysis with evidence of critical thinking, particularly as it regards best capital structure.They always appreciate well written memos that make appropriate use of correct grammar and spelling. They are also very busy running their give birth corporations, so memos written in a concise manner are better received. However, as stated inKeys to Successful Case Studies Write-up Tips, if you have hardly one page of analysis, I will not read it. You will earn a zero. While your memo should be concise, it should also contain a detailed appendix of your calculations. The course website will only allow you to submit one document. Thus, you will need to insert your Excel tables as objects in your sacred scripture document before uploading your write-up to the course website. I must receive both a hardcopy and electronic version submitted through the course website by 200pm on the due date. Otherwise, the write-up is considered late and will not be graded. Extra Credit OpportunityI will grade the assignments. Then I will go back through the assignments and award an additional 5 points (essentially half a letter grade) to any memo that properly referencesat least two relevantHarvard Business Reviewarticles and/or Wall Street Journal articles. See the attachment for the gradingrubric.