newgrade case study
Summary of the company:
The case study of NewGrade Energy is based on data analysis from 2009. A privately owned company located in Regina, Saskatchewan that operates heavy oil upgrader, The Company’s ownership structure consists of the Government of Saskatchewan and Federated Co-Operatives Limited each owning 100% of the company and Crown Investment Corporation (CIC) and Consumer’s Co-Operative Refineries Limited (CCRL) both owning 50% (Ivey, 2009). At the time of its $ 770 million dollar, inception in 1988 CIC and its third-party lenders financed $150 million to the project and the government of Saskatchewan and Canada guaranteed the capital venture (Ivey, 2009). The …show more content…
A firm’s capital structure refers to its “mixture of a variety of long term sources of funds and equity shares including reserves and surpluses of an enterprise” (Pratheepkanth, 2011, p. 172). Most companies in the industry have a capital structure that consists of low levels of debt, which is evident from the various debt-to-equity ratios of competing firms. Only one firm, Frontier, has a high debt-to-equity ratio of 21 percent while the others range from 0 percent to 3 percent (Hatch & Khan, 2011). According to the case study, NewGrade’s capital structure does not include debt because a portion of the company’s 1988 construction was financed by $154