Considering the following guidance questions:
1. What are the primary business risks associated with UST Inc.? Evaluate from the viewpoint of a credit analyst or potential bond holder (1 point). Hint: you may compile a list of factors and comment on them?
2. Why is UST Inc. considering a leveraged recapitalization after such a long history of conservative debt policy?
3. Should UST Inc. undertake the $1 billion recapitalization? Calculate the marginal (or incremental) effect on UST’s value, assuming that the entire recapitalization is implemented immediately (January 1, 1999)?
4. UST Inc. has paid uninterrupted dividends since 1912. Will the recapitalization hamper future dividend payments?
-Identify three KEY issues/concerns in the case and make a brief summary of findings (issues) AND recommendations for each of the three issues at the beginning of the consulting report. -In the body content: 1). make sure that the report covers detailed explanations of issues and recommendations to address the issues and to prove the feasibility of recommendations. 2). Most importantly, please make sure to support recommendations with NUMBERS and QUANTITATIVE REASONINGS. It is VERY important to use quantitative numbers to back up recommendations, making sure the recommendations are feasible for the firm to solve issues concerned. 3). Make the consulting report 4 pages without Appendix in between the contents. Put all the Appendix used in the report at the end. Since no outside sources are allowed, no need for reference pages.
