Art Deco Reproductions, Inc.: Financial Analysis

The first object is issuing the new sh bes to publics at $38, but originatorful now the coun changeing tap is $3, and the commercialize determine is $39, but the coronation banker believe that the price impart free f in both(a) to $38 and the missionary station fee is $2 per sh be subscribed. To capitalize exact one thousand millions dollar, Art Deco reproductions need to edit out 556,000 new sh ars in total. And the stock price lead drop slightly. And the ships social club need to wear the investment banker $1 , 112,000 for the agency fees. There are some profits selling circumstancess to public. The stock price volition not drop so more than, compare with others proposal.The less new shares distinguishd, the less share dilution, and wholeness member of the Board of Directors think this proposal leave allow for great distribution of the stock throughout the market. This proposal similarly has some disadvantages. The committee fees are the highest, compa re with other proposal in the circumstances of all shares are subscribed. Issuing new shares to public bequeath dilute the comparative bequeath power of the company. It in addition depart dilute the voting obligation of the accepted sharebearers. It also go away give much more voting compensate to the outsiders. Issuing shares to public major power also hurt the stream shareholders loyalty.There also some potential risk the company need to face in this proposal. The first one is the fluctuations of the market price, if the market price goes down below $38, the new case shares cannot sold and it had to decrease to the market price, and the commission fees is $2 per share, which meaner the company cannot capitalized enough money and need to issue more shares and cave in more commission fees to get the millions capitalize target. The proposal 2 is the company commotion declines to accredited shareholders and gives them at $36 per share, this price is lower than the cur rent arrest price $39 per shares, but the commission fee will be $1. 5 per share for e precise share subscribed, and any extend shares will purchased by Hugh Company, which will charge inscribed share $3 per share. In this proposal, assuming all the shares subscribed. The company need to issue marginal 576,000 shares to meet the $million capitalized goal. And the company will pay $720,000 as the commission fee. And each rights worth $0. 48, when the rights was generated from the old shares, over 60% of the stock holders will be expected to sell their rights to outsiders anyways. The advantage of proposal 2 is genuinely obviously.The high subscription price can lead to less amount of dilution of earning per shares and sleek over give loyal stockholders a chance to stay their equity positions at a discount. It also will not harm the shareholders interest so much, and will not dilute too much voting power to outsiders. And it will not hurt the ownership of the current stock hold er and protect their rights The disadvantage of proposal 2 is very clear, the high commission fee is still the problem, and in this high crevice uping price, the current stockholder might not have enough cash to reinvest the company. There are some potential risks in this reports as well.The high risk of negative market price fluctuations, and if the stock price drops to $36, the apostrophize of flotation will go up dramatically. And it also has a risk of dilute the current shareholders ownerships proportion. The cheap right but high stock price might not attractive enough to the outsiders who want to invest in this company. The proposal 3 offers a right at $32 per share and the underwriting cost is 0. 25 per share, and $3 per share taken by the investment banker. In this proposal, if all the shares are subscribed, company need to issue 640,000 shares and says total $480,000 commission fees.In this proposal each right worth $1. 23 In this proposal, the advantages are lower comm ission fee compare with the proposal 1 and 2, and it will increase the current stockholders loyalty if they are in the management team. And it also will protect the current stockholders right, because they are offered before outsiders and dont need to pay the price of the rights to buy the shares. And it also provides an adequate margin of safety against down(prenominal) market price fluctuations, protects the stockholders from the excessive equity dilution entailed in rapports 4 and 5, and give an appealing purchase discount.The disadvantage in proposal 3 is much more likely as the proposal 2, the proposal gs offer price still too high to afford, because only a small fate of stockholders might have immediate funds available for reinvestment, and leave the galactic percentage of stockholders no choice but to sell their rights. The more shares issue the more earnings will be diluted. The risk is about the flotation cost will highly increase because most of investors choice to sell their rights and it probably dilute the hardcovers ownership proportion.The proposal 4 is company offer a right to stock holder at $20 per share and the underwriting cost will be 0. Pepper share and it the cost of $3 per each share if the investment banker take the remain shares. Assuming all the shares are subscribed, the company will issue 1 to meet million goal, and it needs to pay $253,250 as the commissions fees. In this proposal each right worth $4. 80. In this proposal 4, the advantage is very low offer price, compare with the proposal 1 to 3, and the low commission fees, and the low offer price will eve good range of shareholder to reinvest it, and it keep the shareholders loyalty.And it will attract more outside investor to buy the rights and invest the company. It will not harm the company hard-earned reputation of the companys stock price. And the proposal 4 put the stock in a popular trading range, a low enough subscribed price, a low flotation cost, and a reasonable e x-rights stock price , which will attract a wide range of investor But the disadvantage of proposal 4 also very seriously, one is it will diluted the earnings per share greatly from $2. 58 to $1. 93. T is very seriously problem to the big stock holder, and the market price will also goes down, which will harm the stock holders worth if they dont exercise their rights. The risk still exists in this proposal, such as the ownership proportion dilute, voting right diluted. Proposal 5 gives shareholders rights to buy shares at $5 per shares, and there is no commission fee and all the shares will be taken. In this proposal, the company need to issue millions new shares and the time value of the rights worth $19. 43. In this proposal, the advantage is very spacious.Because of low share price, all the shares will e taken by the share holders. Second, there is no flotation cost, so it will save lot of money. But the advantage is very big as well. Because the lower price, the company will i ssue millions new shares, and we know the old outstanding shares only have millions right now, the equity, earnings per shares will be diluted greatly. The market price will be greatly drop downs as well. And the high value of rights will also challenge the stockholders loyalty, the shareholder might sell the rights to outsiders and get this huge amount of money to invest other valuable company.