Have A Nice Tea Ltd. (the 'Company') is a UK-based private (family-owned) enterprise active in import/export of tea fragrances. Originally, the Company financed its growth within the home market (i.e. the UK) through retained earnings (by adopting a conservative dividend distribution policy) as well as bank debt (with two lenders historically supportive). Subsequently, the family was forward-looking in hiring external professionals to strengthen its top management, a move instrumental to identifying opportunities to grow sales in selected European countries. In order to fund this expansion in the aftermath of the 2008 financial crisis and the subsequent credit crunch, the Company relied mostly on a private placement of debt from an investment fund for an amount comparable to outstanding bank debt at that point in time.

In the context of the foreseen exit of the UK from the European Union and the related uncertainty, the Company took the view to expand its warehousing capabilities in continental Europe and identified a number of sites in three different countries for potential acquisitions. The Company is now considering the financing options to undertake such a project, in light of a cash position that is relatively solid but clearly not sufficient to cover the capital expenditures envisaged for such expansion.

While discussing options to move forward with the expansion abroad, top management has increasingly seen the existing private placement of debt as a potential issue, given the relatively high charge (interest rate) in the current environment of low financing cost. At the same time, one member of the family owning the Company has decided to leave the business and is soon expected to exercise his right to sell shares back to the Company for cash at market value (based on comparables with listed peers), as foreseen by its corporate statute - his equity stake being one of the largest.

The following sources of financing are deemed to be available to the Company:

Existing retained earnings

Bank loans

Bonds (standard or convertible)

Initial Public Offering (IPO)

Private placement of debt

Private placement of equity

It can be assumed that:

The Company will go ahead with the expansion project

Market conditions (including cost of debt and cost of equity) are, broadly speaking, those experienced in the period 2017 - 2018

The exit of the UK from the European Union is not a key factor any longer, since at this stage the Company is going ahead regardless

a) Firstly: Critically appraise the options available to the Company for the financing of its proposed expansion and recommend a way forward for the Company (assume at this stage that there are no restrictions for the Company in choosing any mix of the sources of financing proposed above).

b) Secondly: i) identify the top three choices of financing deemed more appropriate for the Company,

ii) assess advantages and disadvantages of each of them, and

iii) make a final recommendation (with any mix of the top three choices previously identified)