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Farjana akhter Zulfiqur ayub Mithun kumar paul Naser haider Imran khan

1120130 1120185 1020702 1120494 1020943

Winfield refuse management is a vertically integrated non-hazardous waste management company. Mamie Sheene as chief financial officer took the responsibility through a discussion on how to finance a major acquisition. She needed to make sure that the board could reach a resolution last time.

o o o o

Waste comprised of 2 main categories: Hazardous Non- hazardous Hazardous wastes are infectious medical waste, asbestos, corrosive waste acid. Non- hazardous waste refers to all types of municipal wastes and industrial wastes Private operators collected, processed and disposed of nonhazardous commercial and industrial waste A waste management operator collected the waste and processed it for recycling for energy recovery. This operation was asset- intensive and required vehicles, landfills, disposal facilities, material recovery facilities. The waste management market was growing slower than overall GDP

History of Winfield Refuse

In 1972, Thomas Winfield founded Winfield Refuse as a two truck operation in Creve Coeur, Missouri In 2012, it served nearly a half-million industrial, commercial and residential customers in nine states Winfields assets included 22 landfills and 26 transfer stations and material recovery facilities Winfields board had been following a policy of avoiding long term debt As of 2012, the capital structure of the company consisted of common stock, with no interest bearing debt

Previously in the past years Winfield relied on organic growth to expand its operation It targeted companies that would extend its geographic reach Winfield management team had observed their major competitors both publicly traded and private equity backed, had become aggressive in implementing a rollup or consolidation strategy Important for them in maintaining a competitive cost position In mid 2011, Winfield began discussions with MPIS.

MPIS assets would both improve Winfields cost position in the mid-west and will provide entry in other regions The company was privately owned and had no long term debt Both settled on a acquisition price of 125 million and MPIS would accept upto 25% of the purchase price in Winfield stock Several company directors disagree and prefer that the firm issue common stock just the same as Winfield. Now we students are the ones must have to analyze the costs of issuing either a bond or common stock before making a final recommendation for financing the acquisition.

According to Leo Staumpe

MPIS acquisition was large enough for winfied that external financing would be required An invested bank had indicated that new common stock issued 17.75 per share Net of underwriting fees 16.67 per share An issuance of 7.5 m shares would be required.


the income statement for new issuance is increase to 22.5 in the stock policy.

Staumpe & sheene


and sheene wanted to be re consider the policy of avoiding long term debt.


they avoid long term debt thats mean they are avoiding debt policy, In the income statement they will not pay interest For that they are following the equity policy.

Andrea winfield

winfield immediately challenged sheenes number, pointing out that annual principal repayment had been excluded and that winfield already had long term liabilities.

Company had already long term debt for thats why the most peoples supporting the bond issues.

Andrea uncle joseph winfield agree with the equity issue

For his calculation: EBIT-24 million, MPISs after tax 15 million, 7.5 millon share issue new stock. In terms of new share , MPIS clearly pay for it self how can we say that we are hurting existing shareholders?


Hurting the existing share holders because new stock issue $7.5 million price is more than old stock price. Its obvious bond issue is a bad idea

Joseph Tendi & Naomi

They concurred with kale not issuing common stock but argue is needed to be measured in term of EPS rather than replacement value.


If they are issuing new common stock in the equity. They can not raise EPS other wise using debt. They can raise up to $2.51m

Last Board meeting

All the other major players rely on longterm debt in their capital. with no conclusion among the directors,staumpe suggested the financing decision in the board meeting This allow sheene to prepare her term paper to additional materials to facilitate the discussion

Income statement analyze



Bond EBIT interest, 1st year Earnings Before tax Tax@35% After- tax earning Shares outstanding(millions) Earnings per share Annual principal Repayment

stock 24350 24350 8125 16225 24350 5679 8523 10546 15828 15 22.5 $0.70 $0.70 6250

Bonds 66000 8125 57875 20256 37619 15 $2.51 6250

Stock 66000 66000 23100 42900 22.5 $1.91

Average Analyze

We are agree with equity financing policy and sheene should lead to equity finance acquisition.