Blaine Kitchenware, Inc. Suggested Assignment Questions 1.

Do you believe Blaines current capital structure and payout policies are appropriate? Why or why not? 4. As a member of Blaines controlling family, would you be in favour of this proposal? Would you be in favor of it as a non-family shareholder? 5. How does the proposal sketched above differ from a special dividend of $4.39 per share? 2. Should Dubinski recommend a large share repurchase to Blaines board? What are the primary advantages and disadvantages of such a move? 3. Consider the following share repurchase proposal: Blaine will use $209 million of cash from its balance sheet and $50 million in new debt-bearing interest at the rate of 6.75% to repurchase 14.0 million shares at a price of $18.50 per share. How would such a buyback affect Blaine? Consider the impact on, among other things, BKIs earnings per share and ROE, its interest coverage and debt ratios, the familys ownership interest, and the companys cost of capital.