Reference no: EM132339618

CASE ASSIGNMENT -

In 5 to 8 pages, write a report based on the following scenario:

de la Portilla food stores, a family owned grocery store chain headquartered in Refugio, Texas, is considering a major expansion. The proposed expansion would require de la Portilla to raise $80 million in additional capital. Because de la Portilla currently has a debt ratio of 50 percent, and because the family members have all their funds tied up in the business, the owners cannot supply any additional equity. So the company will have to sell shares of the company to the public. However, the family wants to insure they retain control of the company. This would be de la Portilla's first stock sale, and the owners are not sure just what would be involved. Therefore, they have asked you to research the process and to help them decide exactly how to raise the needed capital. In doing so, you should answer the following questions:

1. What are the advantages to de la Portilla to finance with shares rather than bonds? What are the disadvantages of using shares?

2. Are the shares of de la Portilla food stores currently publicly held or privately owned? Would this situation change if the sale shares were made?

3. What are classified shares (stock)? Would there be any advantage to de la Portilla of designating the shares currently outstanding as "founders' shares"? What type of common shares should de la Portilla sell to the public to allow the family to retain control of the business?

4. What does the term going public mean? What would be the advantages to the de la Portilla family of having the firm go public? What would be the disadvantages?

5. What does the term listed stock mean? Do you believe de la Portilla shares would be listed shortly after the company goes public? If not, where would the shares trade?

Total 5 pages excluding reference and use APA Style.