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Winfield Refuse Management

- Winfield Refuse Management has $125M in long-term debt with an interest rate of 6.5% and will make principal repayments of $6.25M annually over 15 years. - In year 1, the interest payment is $8.125M and the after-tax cash outflow is $11.53M. - The document analyzes Winfield's debt levels, profitability, valuation multiples, and debt-to-equity ratios compared to competitors over the 15-year period.

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Anshul Sehgal
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3K views

Winfield Refuse Management

- Winfield Refuse Management has $125M in long-term debt with an interest rate of 6.5% and will make principal repayments of $6.25M annually over 15 years. - In year 1, the interest payment is $8.125M and the after-tax cash outflow is $11.53M. - The document analyzes Winfield's debt levels, profitability, valuation multiples, and debt-to-equity ratios compared to competitors over the 15-year period.

Uploaded by

Anshul Sehgal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 13

Winfield refuse management, inc

Principal repayment of 6.25 m


Interest payment in the year 1 is 8.125 m
(6.5% on 125 m)
Tax rate 35%
After tax payment is 5.281 m

Principal
Outstanding
Year

principal
repayments
interest @
6.5%

125.00 118.75
1

112.50 106.25 100.00


3

93.75 87.50 81.25 75.00 68.75 62.50 56.25 50.00 43.75 37.50

10

11

12

13

14

15

6.25

6.25

6.25

6.25

6.25

6.25 6.25 6.25 6.25 6.25 6.25 6.25 6.25 6.25 37.50

8.13

7.72

7.31

6.91

6.50

6.09 5.69 5.28 4.88 4.47 4.06 3.66 3.25 2.84 2.44

Principal
Outstanding
Year

principal
repayments
interest @
6.5%
Cash outflow

125.00
1

118.75
2

112.50 106.25 100.00 93.75 87.50 81.25 75.00 68.75 62.50 56.25 50.00 43.75 37.50
3

10

11

12

13

14

15

6.25

6.25

6.25

6.25

6.25

6.25

6.25

6.25 6.25 6.25 6.25 6.25 6.25 6.25 37.50

8.13

7.72

7.31

6.91

6.50

6.09

5.69

5.28 4.88 4.47 4.06 3.66 3.25 2.84 2.44

14.38

13.97

13.56

13.16

12.75

12.34

11.94

11.53 11.13 10.72 10.31

9.91

9.50

9.09 39.94

Principal
Outstanding
Year

principal
repayments
interest @
6.5%

125.00
1

118.75
2

112.50 106.25 100.00 93.75 87.50 81.25 75.00 68.75 62.50 56.25 50.00 43.75 37.50
3

10

11

12

13

14

15

6.25

6.25

6.25

6.25

6.25

6.25

6.25

6.25 6.25 6.25 6.25 6.25 6.25 6.25 37.50

8.13

7.72

7.31

6.91

6.50

6.09

5.69

5.28 4.88 4.47 4.06 3.66 3.25 2.84 2.44

Cash outflow

14.38

13.97

13.56

13.16

12.75

12.34

11.94

11.53 11.13 10.72 10.31

Cash outflow
(after tax
subsidy)

11.53

11.27

11.00

10.74

10.48

10.21

9.95

9.68

9.42

9.15

8.89

9.91

9.50

9.09 39.94

8.63

8.36

8.10 39.08

In the 1st year


Debt
11.53 m (interest + principal repayment)
Out standing is 125 m
11.53/125 is 9.225%

Equity
7.5 m as dividend (1$ per share as dividend)
7.5/125 is 6%

However with equity


The dividends are going to be forever
1$ dividend might not be constant for long future
Trade-off between dividend and stock price

Andrea winfield
Consideration of principal repayment
Only interest it is 6.5%
On principal repayment 9.225%

Increased debt burden increase finance risks


Times interest Earned

EBIT of 66 million
11.53 m in 1st year
1.58 (10% on 15.8 million on leases)
66/(11.53+1.58) = 5x

Ted Kale
Winfield Refuse Management

Price-Earnings Ratio

Price/ Earnings (P/E)


High

Low

11.91

10.83

11.12

10.36

10.23

8.29

10.85

9.60

11.35

10.20

12.07

9.99

17.4

Waste Management

15.3

Republic Services

22.4

Waste Connections

Presently winfield is undervalued


As due to small size and uncertainty regarding the future plans

Ted Kale

common stock
(million )

ownership
percentage

Initial owners
holding
(million )

15

79%

11.85

22.5

52.67%

11.85

Long term debt to equity


James kintanga on debt policy

debt funded equity funded


equity

1,46,272

2,71,272

Retained earnings

5,23,295

5,23,295

Debt

125000

Leases

15813

D/E

0.21

15,813
0.02

Long-Term Debt to
Equity
Waste Management

1.5

Republic Services

0.9

Waste Connections

0.6

Progressive Waste Solutions

1.1

Casella Waste Systems

26.2

EBIT

bond

Bond (principal
repayment)

stock

24.35

0.7

0.7

0.29

66

2.51

1.91

2.09

0.04346

0.0290

0.04322

Slope

EPS vs EBIT
3

2.5

EPS

1.5

bond

1
stock
0.5
Bond (principal repayment)
0

10

20

30

40
EBIT

50

60

70

EBIT (million $)

24.35

66

Leasing Interest (million $)


Principal repayment
(million $)
Interest (million $)

1.581

1.581

6.25

6.25

8.125

8.125

Interest Coverage ratio


after tax (int + Principal
Repayment) (million $)
EBIT coverage

2.509

6.800

11.531

11.531

1.86

5.03

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