Assume that Swedish Match will receive a credit rating of BBB if it moves forward with...

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Assume that Swedish Match will receive a credit rating of BBB if it moves forward with the new financial policy. Answer the following: ● Credit AAA AA A BBB What is the enterprise value before and after the transaction? How many shares will be repurchased and at what price? What is the share price of Swedish Match before and after the transaction? Benchmarka 3-month 6-month 2.179 2.246 2.284 2.463 2.065 2.218 2.262 2.336 2.484 2.119 1-year 2.348 2.389 2.474 2.688 2.225 EBIT interest coverage (x) EBITDA interest coverage (x) Total debt/EBITDA (x) Market leverage (debt/debt plus market capitalization) (%) AAA Maturity 5-year 23.8 25.5 0.4 3.1 Source: Bloomberg, accessed September 2011. a Benchmark interest rate refers to the average of euro-area AAA-rated government debt (sovereign bonds issued by France and Germany). AA 3.150 3.269 3.349 8.819 3.028 Exhibit 5 U.S. Industrial Firms, Aggregate Average Financial Ratios by Credit Rating, 2002-2004 Credit Rating BBB 19.5 24.6 0.9 7.2 10-year 20-year A 3.762 3.918 4.024 4.541 3.695 8.0 10.2 1.6 4.394 4.612 4.624 5.151 4.293 4.7 6.5 2.2 16.1 24.5 BB 30-year 2.5 3.5 3.5 B N/A 4.539 4.970 5.077 4.383 1.2 1.9 5.3 35.5 53.5 CCC 0.4 0.9 7.9 78.2 Assume that Swedish Match will receive a credit rating of BBB if it moves forward with the new financial policy. Answer the following: ● Credit AAA AA A BBB What is the enterprise value before and after the transaction? How many shares will be repurchased and at what price? What is the share price of Swedish Match before and after the transaction? Benchmarka 3-month 6-month 2.179 2.246 2.284 2.463 2.065 2.218 2.262 2.336 2.484 2.119 1-year 2.348 2.389 2.474 2.688 2.225 EBIT interest coverage (x) EBITDA interest coverage (x) Total debt/EBITDA (x) Market leverage (debt/debt plus market capitalization) (%) AAA Maturity 5-year 23.8 25.5 0.4 3.1 Source: Bloomberg, accessed September 2011. a Benchmark interest rate refers to the average of euro-area AAA-rated government debt (sovereign bonds issued by France and Germany). AA 3.150 3.269 3.349 8.819 3.028 Exhibit 5 U.S. Industrial Firms, Aggregate Average Financial Ratios by Credit Rating, 2002-2004 Credit Rating BBB 19.5 24.6 0.9 7.2 10-year 20-year A 3.762 3.918 4.024 4.541 3.695 8.0 10.2 1.6 4.394 4.612 4.624 5.151 4.293 4.7 6.5 2.2 16.1 24.5 BB 30-year 2.5 3.5 3.5 B N/A 4.539 4.970 5.077 4.383 1.2 1.9 5.3 35.5 53.5 CCC 0.4 0.9 7.9 78.2

Answer rating: 100% (QA)

SOLUTION Based on the provided data we can calculate the enterprise value before and after the transaction the number of shares repurchased and the sh... View the full answer