ASSIGNMENT

Part A: (12
marks)

The last few years have been
difficult economically but the owners of Johnsons P/L, a medium-sized
manufacturer of quality dining furniture is keen to grow the business. They
have seen an increase in demand for their products from overseas and feel that
they will need to increase their operation in order to continue to meet this
demand. They are currently looking at a number of options to finance this
expansion such as through debt and through equity raising (meaning they will
need to “go public”). They have determined that they need to raise $60 million.

Giving consideration to the various
options, you have been requested to advise the owners of Johnsons what the
various options are, outlining the positives and negatives of each.

Required: write a report (should be
extensive) to the owners detailing ALL the different options and considerations
that you feel the owners should consider raising the $60 million.

Part B(8
marks)

Regardless of the advice you have
given (Part A), the owners have decided to go “public” and issue an ‘IPO” They
issue 30 million shares ($2.00), of which the payment on application is to
$0.80 per share (closes 18^th April 2013), $0.50 four weeks after
allocation (allocation is 13^th May 2013) and the remaining amount to
be paid on 30^th July 2013 (the call will be made on 30^th
June). The IPO attracts requests for 30.4 million shares. In this case, it
exceeds the allowable number of shares and the directors decide to apply the
“first-come, first-served” approach and return the excess back to the unlucky
applicants

Required: You are to journalise the
events (including dates and notations). You should assume that all monies were
received on 18^th April (applications). What other option did the
directors have with the excess demand, returning the excess?

Attachments:

neeva-corpora….docx