The primary issue in this case is related to pending litigation of the company and increasing competition in the tobacco industry that is likely to erode the market share of the company.
Why is UST Inc. considering a leveraged recapitalization after such a long history of conservative debt policy?
UST is considering a leverage capitalization in order to benefit from the tax shield associated with the debt financing. The increase in value along with existing enterprise value will be distributed amongst lower number of shareholders. Moreover, considering the past performance of UST, the company has a high cash generative capacity of the company’s business. Evaluate the business risks of UST from the viewpoint of a ...
