Blain Kitchenware

Questions to be considered:

1. Do you believe Blaine's current capital structure and payout policies are appropriate? Why or why not?

2. Should Dubinsky recommend a large share repurchase to Blaine's board? What are the primary advantages and disadvantages of such move?

3. Consider the following share repurchase proposal:

• Blaine will use $209 million of cash from its balance sheet and $50 million in new debt-bearing interest at the rate of 6.75% to repurchase
• 14.0 million shares at a price of $18.50 per share. How would such a buyback affect Blaine? Consider the impact on, month other things, BKI's earnings per share and ROE, it's interestcoverage and debt ratios, the family's ownership interest, and the company's cost of capital.

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