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 $116.00, pays a dividend of $6 per share, and that there are 1,200,000 shares of this class outstanding. Preferred stock B is callable at $170, has 60,000 shares outstanding, and pays a dividend of $10.50 per share. The company's common stock has a par value of $2.50 and has 6,000,000 shares outstanding. You have also collected the following data from the company's financial statements: Current assets Net fixed assets Goodwill $1,350.00 1,290.00 60.00 Puyol Corp. Data from Financial Statements (Millions of dollars) Balance Sheet Income Statement $420.00 Current liabilities $105.00 Net sales 382.50 Advance payments 195.00 Operating expense 37.50 Reserves 15.00 Net operating income Class A Preferred stock 139.20 Other income Class B Preferred stock 10.20 EBT Common stock 15.00 Taxes (50%) (% Retained earnings 360.60 Net income Dividends on Class A Preferred stock 7.50 67.50 33.75 33.75 18.00 Dividends on Class B Preferred stock 1.50 Total assets $840.00 Total claims $840.00 Income available to common stockholders $14.25 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 with a par value of $38.67 that pays a dividend of $2.40 per share, plus one 10% subordinated income debenture that carries a par value of $77.33. 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. Puyol Corp. Pro-Forma Financial Statements Based on Reorganization Plan (Millions of dollars) Balance Sheet Income Statement Current assets Current liabilities $105.00 Net sales Net fixed 382.50 Advance payments 195.00 Operating expense assets $1,350.00 1,290.00 Goodwill 37.50 Reserves 15.00 Net operating income 60.00 Other income 7.50 Subordinated debenture $2.40 preferred stock C EBIT 67.50 claims Common stock 15.00 Interest expense Retained earnings 360.60 EBT "''|| Taxes (50%) Net income $2.40 preferred stock C EBIT 67.50 claims Common stock 15.00 Interest expense Retained earnings 360.60 Taxes (50%) 1111 Net income Dividends on $2.40 preferred Total assets Total claims Income available to common stockholders Thus, income available for common stockholders will after the reorganization takes place. 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 $116.00, pays a dividend of $6 per share, and that there are 1,200,000 shares of this class outstanding. Preferred stock B is callable at $170, has 60,000 shares outstanding, and pays a dividend of $10.50 per share. The company's common stock has a par value of $2.50 and has 6,000,000 shares outstanding. You have also collected the following data from the company's financial statements: Current assets Net fixed assets Goodwill $1,350.00 1,290.00 60.00 Puyol Corp. Data from Financial Statements (Millions of dollars) Balance Sheet Income Statement $420.00 Current liabilities $105.00 Net sales 382.50 Advance payments 195.00 Operating expense 37.50 Reserves 15.00 Net operating income Class A Preferred stock 139.20 Other income Class B Preferred stock 10.20 EBT Common stock 15.00 Taxes (50%) (% Retained earnings 360.60 Net income Dividends on Class A Preferred stock 7.50 67.50 33.75 33.75 18.00 Dividends on Class B Preferred stock 1.50 Total assets $840.00 Total claims $840.00 Income available to common stockholders $14.25 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 with a par value of $38.67 that pays a dividend of $2.40 per share, plus one 10% subordinated income debenture that carries a par value of $77.33. 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. Puyol Corp. Pro-Forma Financial Statements Based on Reorganization Plan (Millions of dollars) Balance Sheet Income Statement Current assets Current liabilities $105.00 Net sales Net fixed 382.50 Advance payments 195.00 Operating expense assets $1,350.00 1,290.00 Goodwill 37.50 Reserves 15.00 Net operating income 60.00 Other income 7.50 Subordinated debenture $2.40 preferred stock C EBIT 67.50 claims Common stock 15.00 Interest expense Retained earnings 360.60 EBT "''|| Taxes (50%) Net income $2.40 preferred stock C EBIT 67.50 claims Common stock 15.00 Interest expense Retained earnings 360.60 Taxes (50%) 1111 Net income Dividends on $2.40 preferred Total assets Total claims Income available to common stockholders Thus, income available for common stockholders will after the reorganization takes place