The Chairman could decide that he wants to sell his Greenwich mansion and pay out the proceeds as a thank-you to his loyal shareholders.
Hmmmm. Perhaps this is one of those financial models that doesn’t hold well in the real world due to unrealistic assumptions.
Let me put it this way, check out a company I cover called U.S. Oncology Holdings. They’re considered a public co and you can get their filings on the sec website. The summary is this. They’re held 100% by a small group of private investors and have negative earnings and negative equity but payed something like $500MM in in dividends via issuance of new high yeild debt last year. So, case in point I think.
exactly, except that $500MM of high yield debt would be included in your FCFE during the period it was issued.
Yep.