6. Reorganization plan Your task is to analyze Puyol Corp.'s reorganization plan. Puyol Corp. has reported losses for the past three years and has finally decided to file for bankruptcy. You know that the company has preferred stock A that has a par value of $114.00, pays a dividend of $7 per share, and that there are 1,800,000 shares of this class outstanding. Preferred stock B is callable at $170, has 90,000 shares outstanding, and pays a dividend of $10.50 per share. The company's common stock has a par value of $1.50 and has 9,000,000 shares outstanding. You have also collected the following data from the company's financial statements: Puyol Corp. Data from Financial Statements (Millions of dollars) Balance Income Statement Sheet $168.00 Current liabilities $42.00 Net sales Current $540.00 153.00 Advance payments 78.00 Operating expense 516.00 assets Net fixed assets Goodwill 15.00 $24.00 6.00 205.20 Net operating income Other income 3.00 Reserves Class A Preferred stock Class B Preferred stock Common stock Retained earnings 15.30 EBT $27.00 13.50 -24.00 Taxes (50%) Net income Dividends on Class A Preferred stock Dividends on Class B Preferred stock Income available to common stockholders 13.50 $13.50 7.20 0.60 $5.70 Total assets $336.00 Total claims $336.00 Puyol's creditors have agreed to a voluntary reorganization plan with the following settlements: Each share of preferred stock A will be exchanged for one share of preferred stock C with a par value of $38.00 that pays a dividend of $2.80 per share, plus one 9% subordinated income debenture that carries a par value of $76.00. Preferred stock B that pays a dividend of $10.50 per share will be settled with cash at a call price of $170. Based on the information you have, calculate and fill in the values in the pro-forma financial statements of Puyol Corp. for the reorganization plan. (Note: Round your answers to two decimal places.) Based on the information you have, calculate and fill in the values in the pro-forma financial statements of Puyol Corp. for the reorganization plan. (Note: Round your answers to two decimal places.) Puyol Corp. Pro-Forma Financial Statements Based on Reorganization Plan (Millions of dollars) Balance Income Statement Sheet Current Current liabilities $42.00 Net sales $540.00 assets Net fixed 153.00 Advance payments 78.00 Operating expense 516.00 assets Goodwill 15.00 6.00 Net operating income Other income EBIT $24.00 3.00 $27.00 Reserves Subordinated debenture $2.80 preferred stock C claims Common stock Retained earnings 13.50 -24.00 Interest expense EBT Taxes (50%) Net income Dividends on $2.80 preferred Income available to common stockholders Total assets Total claims decrease increase Thus, income available for common stockholders will after the reorganization takes place
