Analyze the RSC offer. How much is the participating feature of the Series E Preferred worth? To
Question:
Analyze the RSC offer. How much is the participating feature of the Series E Preferred worth? To do so, answer the following questions:
a. (5 Points) Derive a "Capitalization table" that shows how many shares are owned by the various parties if the RSC offer is accepted.
Assume that Metapath would raise $10.75M as specified in the term sheet, not the $11.75M as specified in the case.
Also assume that the terminal payoffs occur in 3 years - before any dividends are actually paid or accumulate.
b. (5 Points) Describe the payoffs of the proposed Series E Preferred in Exhibit 2. Describe the payoffs for both types of possible exit scenarios (Sale or IPO) separately.
c. (10 Points) What is RSC's stake worth under each scenario? Consider carefully when each shareholder is going to convert.
d. (10 Points) How can you get an overall value for the value of RSC's offer? In particular what assumption do you need to make in order to get a numerical valuation of the offer?
e. (5 Points) Comment on the type of security that RSC is getting.
3) (25 Points) How do you analyze the CellTech offer? (CellTech=Alpha, Metapath=Zenith) What are the risks for the Metapath shareholders if the board accepts the CellTech offer?
4) (25 Points) Compare the two offers. Which one would recommend to Metapath's shareholders?