De La Portilla

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 Portillas 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?

Writing Guidelines:

Title page and reference page (not included in the 5 8 page
count)
Must be double-spaced with 1-inch margins and typed in
12-point Times New Roman
Paper should be proofread for spelling and grammar mistakes.
Paper should be in APA style.
Please submit in a word document and NOT pdf version.
You must cite and reference all texts used, including page
numbers to avoid plagiarism.
Your paper must have an introduction and conclusion
paragraphs.
You should use headings and subheadings to organize your
paper.
Use at least 5 scholarly or professional practitioner sources in
your paper.

 

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