AOL Inc. Company - Assignment Example

The covenants dictate how the company incurs debt, creates lien pay dividend or even enters into mergers and acquisitions. Any breach of any of the covenants would lead to a default which may cause the lenders to terminate their commitments under the credit facility (AOL Inc., 2015). That would be financially detrimental to the firm. The firm may also not be in a position to settle any conversion of Notes in cash or even repay them at maturity. The use of convertible note hedge transactions and warrant transactions may influence the prices of stock.

That would adversely affect the value of stock the shareholders hold in the company. According to company records, there were about 14,668 holders of common stock as of February 24, 2015 (AOL Inc., 2015). However, brokers and other institutions held the shares on behalf of the stockholders. The company does not declare dividends every year as that would influence to a great extent the amount of common stock it may issue. The last time it declared special dividend was on August 26, 2012, which was $5.

15 per share (AOL Inc., 2015). The company has no anticipation of the declaration of dividend in the near future. The company’s stock prices have fluctuated over the last two years indicating that the trend may persist into the future. However, a graph comparing the performance of AOL Inc.’s common stock with the Morgan Stanley High-Technology index and the S & P Midcap 400 Index show a gradual improvement in AOL Inc.’s returns. Over the five year period, AOL Inc.’s returns record a rise.