Problem 2 - Financing Choice (15 marks) Health-Provence inc. has been listed on Euronext compartment C since 2005. The most recent stock price is 12.90 euros. The Company was founded in 1995 by Claude Sant who is still the CEO and chairman of the board of directors. The Sant family holds 58% of the company ownership and voting rights. Health Provence is a pharmaceutical company and consequently belongs to a research-intensive industry with significant investments in R&D projects. The Table below shows recent financial data about Health-Provence. Data in millions () 6 2018 2017 Shareholders' Equity 125 115 REQUIRED The company in considering a new investment project whose value represent 25% of total equity. The company's CEO is contemplating two alternative financing sources: (1) use of financial debt to find the project or (2) new share issue (capital increase) either in the form a rights offering (issue with rights) or a regular share issue without preferential subscription rights to existing shareholders. Among the two financing alternatives, which one would you recommend to Health-Provence ing? You need to quantify the company's financing need, available debt capacity, the new share issue price and the number of shares to be issued (with rights or without rights). Your answer should also discuss the pros and cons of the two financing alternatives Health Provence inc. and explain which option you recommend to the company Your answer should be fully justified and not exceed 15 lines. Total Assets 350 330 Financial Debt 40 38 9 8 34 30 Cash and Cash equivalents Profit from recurring operations Operating Profit Net cost of financial debt 30 28 3 3 Average stock price 12 11 63 62 Outstanding shares (in millions) RATIOS Equity/Total Assets 35.79 34.8% 0.32 0.33 0.25 0.26 0.91 1.00 Financial Debt/Equity Net Debt/Equity Net Debt/profit from recurring operations Operating profit/Net cost of financial debt Cash/Total Assets INDUSTRY DATA 10.00 9.33 2.6% 2.4% Net Debt/Profit from recurring operations 1.9 1.8 Problem 2 Financing Choice (15 marks) Health Pronusce ine has been listed on Buront compartment since 2005. The most recent stock price is 12.90 ora. The Company was founded in 1995 by Claude Sant nato is still the CEO and chairman of the board of directors. The Sunte family holds 58% of the company ownership and voting rights. Health Provence is a plumaceutical company and consequently belongs to a research intensive industry with significant imestments in R&D projects. The Table below shows recent financial data about Health Provence. Data in millions (E) 2018 125 REQUIRED The company in considering a new westment project whose wateret 25% of total equity The company's CEO ta contemplating two alternative financing Source : (1) of financial debe to find the project or (2) new share issue (capital increase either in the form a rights offering (issue with rights) or a regular share issue without preferestial subscription rights to existing shareholders Among the two financing alternatives, which one would you recommend to Health Provence in? You need to quantify the company's financing need available debt capacity, the new share issue price sed the number of shares to be issued (with right or without nglits). Your swer should also discuss the pros and cons of the two financing alternatives Health Provence inc. and explain which option you recommend to the company Your answer should be fully justified and not exceed 15 Times. 2017 Shareholders' Equity 115 Total Assets 350 3.30 38 8 Flancial Debe Cash and Cash equivalents Profit from recurring operations Operating Profit Net cost of financial debt 30 30 ZN 3 12 11 02 Average stock price Outstanding shares in millions) RATIOS Equity/Total Assets 38.79 34.89 Financial De Equity 0.25 0.26 091 1.00 Net Debt/Equity Nel Debit/prolit from recurring operations Operating profeNet cost of tinancial debe Cash/Total Assets 10.00 2.646 2.49 INDUSTRY DATA Net Debt Profit from recurring operations 1.9 1.8 Problem 2 - Financing Choice (15 marks) Health-Provence inc. has been listed on Euronext compartment C since 2005. The most recent stock price is 12.90 euros. The Company was founded in 1995 by Claude Sant who is still the CEO and chairman of the board of directors. The Sant family holds 58% of the company ownership and voting rights. Health Provence is a pharmaceutical company and consequently belongs to a research-intensive industry with significant investments in R&D projects. The Table below shows recent financial data about Health-Provence. Data in millions () 6 2018 2017 Shareholders' Equity 125 115 REQUIRED The company in considering a new investment project whose value represent 25% of total equity. The company's CEO is contemplating two alternative financing sources: (1) use of financial debt to find the project or (2) new share issue (capital increase) either in the form a rights offering (issue with rights) or a regular share issue without preferential subscription rights to existing shareholders. Among the two financing alternatives, which one would you recommend to Health-Provence ing? You need to quantify the company's financing need, available debt capacity, the new share issue price and the number of shares to be issued (with rights or without rights). Your answer should also discuss the pros and cons of the two financing alternatives Health Provence inc. and explain which option you recommend to the company Your answer should be fully justified and not exceed 15 lines. Total Assets 350 330 Financial Debt 40 38 9 8 34 30 Cash and Cash equivalents Profit from recurring operations Operating Profit Net cost of financial debt 30 28 3 3 Average stock price 12 11 63 62 Outstanding shares (in millions) RATIOS Equity/Total Assets 35.79 34.8% 0.32 0.33 0.25 0.26 0.91 1.00 Financial Debt/Equity Net Debt/Equity Net Debt/profit from recurring operations Operating profit/Net cost of financial debt Cash/Total Assets INDUSTRY DATA 10.00 9.33 2.6% 2.4% Net Debt/Profit from recurring operations 1.9 1.8 Problem 2 Financing Choice (15 marks) Health Pronusce ine has been listed on Buront compartment since 2005. The most recent stock price is 12.90 ora. The Company was founded in 1995 by Claude Sant nato is still the CEO and chairman of the board of directors. The Sunte family holds 58% of the company ownership and voting rights. Health Provence is a plumaceutical company and consequently belongs to a research intensive industry with significant imestments in R&D projects. The Table below shows recent financial data about Health Provence. Data in millions (E) 2018 125 REQUIRED The company in considering a new westment project whose wateret 25% of total equity The company's CEO ta contemplating two alternative financing Source : (1) of financial debe to find the project or (2) new share issue (capital increase either in the form a rights offering (issue with rights) or a regular share issue without preferestial subscription rights to existing shareholders Among the two financing alternatives, which one would you recommend to Health Provence in? You need to quantify the company's financing need available debt capacity, the new share issue price sed the number of shares to be issued (with right or without nglits). Your swer should also discuss the pros and cons of the two financing alternatives Health Provence inc. and explain which option you recommend to the company Your answer should be fully justified and not exceed 15 Times. 2017 Shareholders' Equity 115 Total Assets 350 3.30 38 8 Flancial Debe Cash and Cash equivalents Profit from recurring operations Operating Profit Net cost of financial debt 30 30 ZN 3 12 11 02 Average stock price Outstanding shares in millions) RATIOS Equity/Total Assets 38.79 34.89 Financial De Equity 0.25 0.26 091 1.00 Net Debt/Equity Nel Debit/prolit from recurring operations Operating profeNet cost of tinancial debe Cash/Total Assets 10.00 2.646 2.49 INDUSTRY DATA Net Debt Profit from recurring operations 1.9 1.8