Reference no: EM132455748

Problem: Z plc is a large, long established manufacturing company. The company is expanding and the directors are keen to identify new ways in which they might obtain the necessary finance. The finance director has warned that the company must obtain most of this new funding from the sale of new shares. The company has borrowed very heavily in the past and the company's existing loan agreements require it to seek the permission of existing lenders before obtaining further debt.

Z plc is not quoted on the stock exchange. The family of the company's founders owns most of the company's share capital. It is unlikely that these investors will be able to invest the sums required to take advantage of the opportunities that the directors have identified. It has been suggested that the company might seek a stock exchange quotation.

Required:

Question 1: Explain the advantages and disadvantages to Z plc of issuing fresh share capital.

Question 2: Explain the advantages and disadvantages of obtaining a stock exchange quotation.

Question 3: Assuming that Z plc obtains a quotation, identify the most appropriate method by which the company might issue fresh share capital and describe the steps that are involved. Your answer should explain why you have chosen this particular method.