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Yore Brewing Company went public five years ago with an issuance of 5 million shares which, as of yesterday, were trading at $50 per share.
Yore Brewing Company went public five years ago with an issuance of 5 million shares which, as of yesterday, were trading at $50 per share. They are looking to raise capital to start-up a chain of brewpubs in California by issuing an additional 2.7 million shares tomorrow in a Seasoned Equity Offering (SEO). Management expects the current publicly traded shares to drop 2.5% at tomorrow's offering. However their investment bank, hoping for a fully subscribed offering, has suggested an offer price of $45.94 for those investors allocated shares from the SEO (i.e., there will likely be under pricing). The investment banker intends to charge a 7% spread for a firm commitment underwriting of the issue and $250,000 in legal and registration fees. The management team also estimates that at least one month's worth of the CFO's available man-hours were dedicated to preparing the offering and the CFO currently earns $120,000 per year. What are the total dollar amount of direct expenses associated with Yore Brewing Company's SEO? ____
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