The JNH share is trading at C24. The companys share capital is divided into 8,910,000 shares. The

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The JNH share is trading at C¼24. The company’s share capital is divided into 8,910,000 shares. The value of the senior debt can be estimated at half of its face value and the value of the subordinated debt at 21% of its face value. The following rescue plan has been submitted to all of the investors in the company:

Shareholder subscription to a capital increase of 15,500,000 new shares at a price of C¼20 per share, totaling C¼310m.

Partial repayment and conversion of the subordinated debt into capital: issue of 3,850,000 new shares and repayment of C¼36.96m.

Waiver of C¼160m of debts by senior creditors. In exchange, 1,250,000 warrants entitling holders to subscribe after 3 years to one share per warrant at a price of ¼C 25 per share. The value of these warrants is estimated at C¼4 per warrant. The

proceeds of the capital increase that are left over after partial repayment of the subordinated debt will be used to repay the senior creditors.

(a) What is your view of the financial health of this company?

(b) Calculate the value of the different securities used to finance the capital employed.

(c) Calculate how much the various lenders will have before and after the rescue plan. Assume the negotiated amount of the face value of the senior debt will be 80% after the plan.

(d) Who is the key beneficiary of this plan?