Winfield Refuse Management- Case Study

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Winfield Refuse Management 1. Provide an overview (synopsis) of the case. This is the case introduction that provides relevant background information (case situation). This case study discusses Winfield Refuse Management which is a publicly traded company that focuses in non-hazardous waste management. The company is considering a major acquisition in the Midwestern U.S. that can provide entry into the region and allow them to compete in a competitive industry which allows them to improve its cost position. In order to avoid long term debt the company has a long-standing policy and until now a lot of small acquisitions have been made by using only internal financing. This policy was questioned and the chief financial officer wanted the board of directors to reconsider it and suggested that funding could be acquisitioned through a bond issue. A lot of disagreement was made by several company directors that instead wanted the firm to issue common stock. In the end, the argument is about whether to raise debt or equity. Winfield Refuse’s acquisition of MPIS was a great opportunity to increase revenue and reduce costs through economies of scale. However, the expansion of the firm also means that Winfield Inc. needs to select a method of external financing to continue its operations effectively. The Winfield family and senior management held 79% of common stock in 2012. This means the company places tremendous importance in the ownership of company. The acquisition of MIPS should not change the stakes of ownership of Winfield Refuse. Board Discussion 2012 CFO Mamie Sheene recommended issuing bonds, based on an annual cash cost calculation of 6% for stock issuance. Her rationale was that Winfield could sell $125 million in bonds to Massachusetts insurance company at an annual interest rate of 6.5% set to mature in 15 years. Principal repayment would be

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