Shares Remaining After Recapitalization
Dye Trucking raised $200 million in new debt and used this to buy back stock. After the recap, Dye’s stock price is $6.25. If Dye had 60 million shares of stock before the recap, how many shares does it have after the recap? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places.
million
RECAPITALIZATION
Restructuring a company’s debt and equity mixture, most often with the aim of making a company’s capital structure more stable. Essentially, the process involves the exchange of one form of financing for another, such as removing preferred shares from the company’s capital structure and replacing them with bonds.
If the company undergoes the proposed recapitalization, it will repurchase:
Shares repurchased = Debt issued / Share price
Shares repurchased =$200 million/$6.25
Shares repurchased = 3,2 million
He will have 28 million of share after recapitalization
(60-32)
