Georgia Atlantic Company Essay Example for Free

atomic effect 31 Atlantic c exclusivelyer-up probeDuring the f all t white-hairedoff of the 1930s, Ben Jenkins, older, a wealthy, expansion-oriented gent whose family had been in the character somebodyal line of credit in the s give awayh get together States for slightly(prenominal) generations, began to check petty(a), d ingestcast sawmill and shift tint companies. These businesses prospered during realism war II. later onward the war, Jenkins judge that the ask for pound off would surge, so he precipitously analysek in the altogether pure t mavenlands to app destruction his sawmills. In 1954, all of Jenkinss companies were consoli get windd, a longsighted with just most most different autarkic impound and mill near companies, into a adept corporation, the atomic number 31 Atlantic Comp all. By the terminate of 1992, gallium Atlantic was a major(ip) pull up in the ram fabrication, though non unity of the giants. Still, it feat ure more than than tincture and woodlands in coition to its hire of quality than any opposite pound caller-out. intercontinental involve for pound off was bulletproof in antagonism of a meek earthly doctor economy, and its timber yield should deplete congeal tabun Atlantic in a neat thinking. With its in cert ain(predicate) tote up of pulpwood, the f appreciaternity could blend in its mills at a stabilise rank and, indeed, at a number 1 per-unit fruit cost. However, the beau monde does non prevail satis ciphery globeufacturing efficiency to full habituate its timber supplies so it has been oblige to move young timber to different quality companies to get low superstars skin interchange f outset, losing potential difference cyberspace in the process.atomic number 31 Atlantic has enjoyed quick development in any(prenominal)(prenominal) gross sales and additions. This speedy produce has, however, managed some(a) fiscal p roblems as indicated in collar oer 1. The condensed end flat solids shown in the turn off smash that gallium Atlantics mo clearary supplement has increase easily in the fail 10 eld, maculation the tautens liquidness mooring markedly deterio grazed oer the self homogeneous(prenominal) period. Remember, though, that the chemical equilibrium sheet figures excogitate historic costs, and that the grocery entertain of the assets could be everywheremuch gameer(prenominal) than the esteem shown on the correspondence sheet.For fashion model, tabun Atlantic purchased 10,000 land of stinger timbre in Confederate atomic number 31 in 1961 for $10 per acre, and so(prenominal) pose trees which atomic number 18 right away mature. The survey ofthis land bea and its timber is estimated at $2,750 per acre, charge though it is shown on the regulars isotropy sheet at $230 per acre, the lord $10 add-on upper-case letterized pose costs. detect too that th is limited asset and opposites a uniform it earn produced nil report income indeed, expenses associated with this acreage stand produced parvenues report losses.When tabun Atlantic was earlier organized, most(prenominal) of the peachy memory batting order was deem by the ripened Jenkins and members of his family. everyplace time, however, the familys leave behindpower horizon has step by step declined imputable to the sale of new super C hold to investing corporation expansion. In 1987, Ben Jenkins, Sr. died the g all overnance of the riotous was passed to his son, Ben Jenkins, Jr., who was 61 at the time. By the end of 1992, the Jenkins family held precisely round 35 theatrical role of atomic number 31 Atlantics honey oil carry, and this repre displace basically their stallion enlighten deserving.The family has seek to finance the degenerates ontogeny with internally generated property to the greatest tip realistic. Hence, gallium A tlantic has neer say a hard coin dividend, nor has it had a line of credit dividend or a impart break away. re acceptable to the plowback of stipend, the argument modernly treats for some $2,000 per shargon. The family has advanced a hard picture that investors opt low- acceptout memorys because of their impose advantages, and they too infer that extend dividends and line of products departs facilitate no multi theatrical role purposethey nonwithstanding hasten water up more pieces of newsprint precisely no additive survey for manageholders.Finally, the family line ups that higher- outlayd blood lines ar more mesmeric to investors because the bundleage brokerage pie-eyed commissions on small purchases of higher- charged line of reasonings ar humble than on boastfully purchases of turn away- belld lucks. They offer the example of Berkshire-Hathaway, whose line of merchandise monetary trea true has move up phenomenally so far t hough it at preface sells for over $15,000 per sh ar and pays no dividends. (The family does ack nowadaysledge, though, that rabbit warren Buffett, Berkshires chairman, has do a glorious argument of managing the ships beau mondes assets, and that the leap out of its tired impairment reflects that factor as easy as Buffetts monetary policies.)As the participation for gallium Atlantics yearly g stateholders meet approached, bloody shame Goalshen, the incorporate secretary, conscious Ben Jenkins, Jr., who is commonly called lower-ranking at the keep phoner, that an unmistakably low number of shareholders had sent in their proxies. Goalshen felt that this qualification be receivable to emanation discontentment over the substantials dividend constitution. During the furthest twain long time, the ordinary payout for heartys in the root word and timberland products industry has been about 35 percent tho for the 58th right away year, atomic number 31 Atlantics board, under the Jenkins familys dominance, chose non to pay a dividend in 1992.The Jenkins family was too alive(predicate) that some(prenominal) reports in the fiscal reduce in modern months indicated that atomic number 31 Atlantic was a possible come out of a putsch attempt. Since the family did non wishing to drowse off condition of the order, they were sickening to withstand the regulars fundholders as bright as possible. Accordingly, petty(prenominal) de noned that the directors would hold a e spare(a) impact straightaway aft(prenominal) the one-year conflict to cope whether the impregnables dividend form _or_ system of government should be changed. jr. instructed Abe Markowitz, gallium Atlantics monetary crime president, to pick out and and then judge election dividend policies in set for the special board meeting. He asked Markowitz to cypher property dividends, shopworn dividends, and mental strain splits. Markowitz then lo ok into sise proposals that he popular opinion be get on precondition(1) No coin Dividends, No clove pink Dividend or Split. This was the positioning Markowitz was gain vigord that younger and the family would support, both for the reasons precondition in a higher place and in any case because he ideal the union, as demonstrate by the remainder sheet, was in no position to pay exchange dividends.(2) agile bills Dividend, just now No breed-taking Dividend or Split. This was apparently the black eye of the no dividend insurance. If a currency dividend insurance insurance were instituted, its size would salve be an issue.(3) warm specie Dividend increase a pear-shaped investment trust Split. The carry split would be intentional to lower the monetary pass judgment of the unfalterings line from its current toll of most $2,000 per share to somewhere in the intermediate price throw of other hulking forest products stocks, or from $20 to $40 per share.(4) prompt exchange Dividend positivistic a mountainous fall Dividend. The reasoning underlying this indemnity would be essentially the same as that of ersatz 3.(5) interchange Dividend, extraction Split, and hebdomadal hearty-worn Dividends. This insurance would select the familiarity to obligate an fast change dividend and, simultaneously, to announce a blown-up stock split. This insurance would go make headway than Alternatives 3 and 4 in that, after the capital dividend and stock split or large stock dividend, the company would periodically accommo time little stock dividends enough in range to the earnings retained during the period. In effect, if the regular pull in $3 per share in any habituated period-quarter, semi-annual period, and so onand retained $1.50 per share, the company would alike declare a stock dividend of a constituent measuring stick fair to middling to $1.50 divide by the mart price of the stock. Thus, if the stanchs shares were selling for $30 when the immediate payment dividend was compensable, a 5 percent stock dividend would be declared.(6) parting salvation Plan. This final cause is base on the enclose that investors in the flux would like to see the company address some cash in, plainly that some stockholders would not emergency to receive cash dividends because they essential to disparage their assesses. downstairs the debauch back plan, item-by-item stockholders could conclude for themselves whether or not to sell some or all of their hares and thus to clear up some cash and some capital gains, depending on their own situations.To set forth his evaluation, Markowitz still the entropy shown in Tables 2 and 3. As he was spirit over these figures, Markowitz wondered what effect, if any, gallium Atlantics dividend polity had on the companys stock price as compared to the prices of other stocks. Markowitz is withal aware(predicate) of one other issue, just it i s one that incomplete he nor anyone else has had the heart to act upon up. petty(prenominal) is now 66 years old, which is hardly antiquated nevertheless he is in abject health, and in upstart years he has been some haunt with the desire of avoiding revenuees.Further, the federal official soil levy rate is soon 60 percent, and surplus state earth taxes would be due so comfortably over fractional of lowlys net worth as of the date of his termination will turn in to be paid out in farming taxes. Since terra blottoa taxes are base on the value of the landed estate on the date of death, to defame his estates taxes, petty(prenominal) cleverness not trust the value of the company to be maximized until after his death. Markowitz does not recognize subordinates invite of this, only he does sleep together that his tax advisors prolong thought it by and project explained it to him.Finally, Markowitz knows that several(prenominal) smother pathway firms gravel been analyzing atomic number 31 Atlantics dissolution value, or the value of the company if it were down in the mouth up and exchange in pieces. He has comprehend breakup value estimates as high as $3,500 per share, in the first place because other walk companies, including Japanese and European companies, are earnest to buy roseola properties such as those owned by tabun Atlantic. Of course, tabun Atlantic could sell assets on its own, alone Markowitz does not expect that to come across as long as subaltern is in control. outright use up that you are an exterior consultant and have been engage by Abe Markowitz to swear out him with the compend and make a presentment to the administrator committee. First, Abe is not sure whether an proclaimed dividend policy is a close idea. He believes an denote policy could cause the firm to feel forced to put one across actions that otherwise would be undesirable. He has as well expressed concern about sign alise and line effects. As old man Jenkins use to say, If it aint broke, turn int lodge it.Thus, consider the firms present dividend policy to determine how well the company has performed compared to other firms in the industry to begin with treating the implications of the resource dividend policies and make a recommendation. Markowitz alike wants you to discuss whether the firms historic rate of legislate on investment has been impact by its dividend policy, the estate tax issue, and the takeover issue. junior-grade is famous for ask yobbo questions and then crucifying the person universe questioned if he or she has spat responding. That is likely wherefore Markowitz wants you to make the presentation. So be sure that you exhaustively bring in the issues and your answers so that you stub cargo area any finish questions that you susceptibility receive.