70.2K

Verified Solution

Link Copied!

Please answer as soon as possible.

Subject : Cooparate Finance

Corporate Finance Question 1 (a) Ihe privatisation of Krverside Water Council occurred in 2008. Alter it was privatised, it is called Riverside Water ple (RW). The most important motivation for this privatisation other than political factors was to enable RW access to private financing opportunities. In the 1990s, the federal government's control of investmeat expenditure had yielded relatively low capital expenditure levels. Hence, a huge amount of investment was needed so that the firm can comply with stricter water quality laws, When the fim was privatised, investment banks valued it at 2200 mill. The shares were traded in the quantity of 200 million ordinary equity (face value 50p), fully sold and paid for at El per share. The equity achieved a premium of 40% on the 1st day of trading of the stock market. Required: How will the goals of a firm like Riverside/RW change when it changed from a public firm to a private enterprise? (5 marks) prospectus's dividend policy. Privatised utality firms are monitored by a regulatory body which control price increase. The location's water demnnd served by RW has increased at 2% per year which is largely reflecting the trends of demographics. Required: Based upon the data given, cvaluate the extent RW had fulfill the interest of the parties as the following, in its first 6 years as a private fim. If possible, recommend other useful data as well to form a balanced evaluation: (i) Equity holders ( 5 marks) (ii) Consumers (5 marks) (iii) Workers (5 marks) (iv) The macroeconomic achievements of NW with respect to the stability of prices and economic growth. [Total : 25 Marks]

Answer & Explanation Solved by verified expert

See Answer