22 March 2008
A Co. has commenced a hostile tender offer to purchase all outstanding stocks of other Co. at Rs.61 a share. the other Co. is not satisfied with the offer as it thinks inadequate.so now this other Co. is reviewing a possibility of major recapitalisation. effects of recapitalisation alternative : maximum borrowing capacity Rs. 1738095 at a pre tax cost of debt of 10.5% borrowings already there Rs. 172409 additional debt that can be taken Rs.1565685.
my query is now if this additional debt is taken what all things will be affected & effect on co.s book and market value balance sheet (items).Will M & M Approach be useful here? Sir/Madam i request u to foward me the details of this case study. thanking you, Yours faithfully, Manjushree Ursal CA Final Student.
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