Page 64 - The Case Lab Book

The CEO thought about this called an extraordinary meeting of the

board and made some suggestions at the meeting:

• Issue interim accounts to aid an increase in share value e.g. increased
dividend, future prospects etc.
•

• Re-value one third of all centers on a rolling basis to ensure the book
value of the company does not contain any hidden value.
•
• Engage immediately in sale and lease-back of a major proportion of
the centers
•
• Institute a programme of borrowing to increase the debt ratio

making the company less attractive for takeover

The objective of the CEO is to make the company as unattractive as
possible for takeover by reducing the free cash flow that might accrue
from its acquisition. At the same time to make it as attractive as

possible to its shareholders in terms of long-term dividends

• Issuing interim accounts allows the company to put a more positive gloss
on the performance of the company
•
• Re-valuing one third of the company’s primary assets every year ensures
that there is little hidden book value for an acquirer to access whilst at the
same time allowing the company to build upon the true value of the
company for supporting its financial plans
•
• Developing a programme of sale and lease back will allow the CEO to
access funds whist at the same time reducing running costs
•
• The CEO appears to wish to ensure that the company is operating as
fiscally efficiently as possible e.g. borrowing within the industry norm of
gearing/leverage