1. Mark Fielding- Pritchard
Nubo December 2013
Mark Fielding- Pritchard
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2. a) Assets Assets NCAs 70% x 550 x 1.15= 442.75
Total $511m
Assume liabilities remain
Spin Off
166/2= 83m
83x 7= $581
So sale as going concern yields more
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3. a) If sold as going concern we receive $581m
Paying off all liabilities 482 leaves $99m
New asset value ( )30%= 201.6
Borrowing capacity = $300m
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4. b) Put all of the assets and liabilities into newco
Shares are distributed to Nubo in the proportion of their current shareholdings
New management team brought in ( or existing kept).
Usually demergers result in sharp rise in share price
Presumably Newco would be a prime target for a takeover
Nubo loses the opportunity to make gains from the goodwill in the shares so won’t get the $99m gain.
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5. Musharaka
Musharaka, or Sharika or Shirkat (Arabic: مشاركة or شركة ) meaning partnership, is an Islamic mode of finance in which capital is provided by two or more parties for project development. Banks can provide financing to a project with equity rather than a fixed-interest loan, which most pious Muslim consider haram (forbidden). The profits of the project are shared among the investing parties on the basis of their participation or on a pre-agreed ratio and the losses are shared on the basis of equity participation. The difference between musharika and mudaraba is that in musharika, all involved parties provide capital to share in the profit or loss of the project. In mudaraba, one party provides the capital and the other acts as an agent to invest it. The agent in a mudaraba does not share in the losses.[1]
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6. Mudaraba
A mudaraba contract is one of the most widely used financial instruments in the Islamic banking sector. A mudaraba contract is based on a partnership in which one partner is the financier (the investor, or silent partner) and the other partner (the fund manager, or working partner) manages the financier’s investment in an economic activity.
The second partner (often an entrepreneur) has expertise in applying the venture capital into the economic activities. Both parties agree in advance to a profit and loss sharing (PLS) ratio. In Arabic, the investor is called rab al mal, and the fund manager is called the mudarib.
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