Corporate Finance

Kenyon Enterprises, Inc. (Kenyon) is a Delaw ar sight engaged in the fiction and dispersion of recreational and bivouac equipment. Kenyon has striking near $400 one million million principal sum bestow of convertible unsecured bonds (the unsecured bonds) which were issued in early 2002 and mature in the year 2032. Each debenture bond bond represents a debt in the amount of $1,000 which bears amour at the array of 7% annually. The debenture bonds are publicly traded and wide held (no mortal holds more than 3% of the outstanding unsecured bonds). Kenyon management regarded the 2002 matter of the unsecured bonds as well epochd in relation to the evoke rate environment. An attempt to issue the very(prenominal) type of debentures in the contemporary climate, in which interest rate have go block to higher, would likely require an interest rate of 7.5% or mayhap 8.0% to attract debt investors. Kenyons has 12 million portion outs of uncivil stock outstanding which are traded on the New York computer memory Exchange. Kenyons parcel outs have traded on average at close to $50 per share during the last 12 months. Kenyons current production capitalization (the aggregate assess of all outstanding greens shares at current per share market place price) is thus most $600 million (i.e., $50 per share times 12 million shares = $600 million).

The shares of Kenyon reciprocal stock are also widely held. The largest shareowner is Kenyons founder and CEO, Kurt Kenyon, who owns approximately 7% of the outstanding shares. Kurt Kenyon owns no debenture bonds. The Debentures are convertible into Kenyon general stock any time at the option of the Debenture holder at a rate of 15 shares of Kenyon jet stock for each $1,000 Debenture. and then to exercise the reincarnation option, the Debenture holder must free fall his or her Debentures to Kenyon and for each Debenture surrendered will receive 15 shares of Kenyon common stock. To date this diversity option has been out of the money. For example, at the recent $50 per share market...If you want to get a full essay, order it on our website: Orderessay

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