1.Goldman funds acquire Endesa's Spanish gas assets for $1.

1 bn news 29 September
2010

Italian energy giant Enel SpA's Spanish subsidiary Endesa SA has agreed to sell 80-per cent
stake in its arm Endesa Gas SA to two infrastructure funds operated by global investment and
securities major Goldman Sachs for approximately €800 million ($1.1 billion), Enel said in a
statement.

The transaction is part of Enel's business strategy for 2010-2014 to optimise the Group's
portfolio and reduce its net debt.

Endesa Gas's assets include around 3,800 km of distribution and 600 km of transportation
networks, 355,000 delivery points, with annual consumption of 7,500 GWh.

The total gas assets are valued at approximately €1 billion ($1.35 billion) and the transaction
will result in reducing Endesa's net debt by about €800 million. It is also expected that the
deal will have a positive impact of around €450 million on Endesa's pre-tax profit.

Enel CEO and general manager Fulvio Conti said, "Today's transaction represents another
step forward in the implementation of our plan to optimise the Group portfolio and strengthen
its capital structure.''

''Together with disposals already under way, and on-going initiatives to improve operational
cash flow, this operation enables us to confirm the objective for reducing the Group's net
financial debt in line with the plan announced to the markets," Conti further stated.

2. Vishal Retail to sell off its core retail businesses news 14 September 2010

Vishal Retail, which has been posting operating losses over the past six quarters following
the poor show by its retail venture, yesterday came out with a proposal to sell its core retail
business to the Shriram Group and the wholesale business to TPG, a global PE investor. This
would include in toto the underlying assets and certain liabilities pertaining to the businesses.

The Delhi-based company's latest move should not come as a surprise given the difficult
times it is passing through over the past two years. However analysts say it would be difficult
to figure out what exactly shareholders stand to gain given Vishal Retail remains tight-lipped
about the deal structures under the two transactions.

Vishal Retail has expanded its business using debt-heavy capital structure but with the
domestic retail sector facing a tough time due to the economic slowdown in 2008-09,
consumer spending was far from what was expected. Not surprisingly therefore Vihsal's
earnings fell over the subsequent quarters and it now faces liquidity issues. Earlier, the
company had planned several corrective measures including shutting down its loss making
stores, warehouses and manufacturing facilities.

It had also slashed its workforce over the past few quarters, so the latest deal probably comes
as the last resort measure by the company. Media reports say the company has been trying
hard to find a strategic buyer for the past couple of months.
According to the management, the proposed sale transaction would reduce a portion of debt
from the balance sheet and additionally it would receive an upfront payment of Rs75 crore
and another Rs25 crore in the form of bonds with yield maturity of 7.5 per cent redeemable in
five years.

With the cash, the company would be able to clear debts from certain creditors, who have
initiated winding up proceedings against the company.

3.SEBI asks companies to disclose shareholding pattern a day ahead of IPO news 05
August 2010

The Securities and Exchange Board of India (SEBI) has directed companies to file
shareholding pattern one day prior to the date of listing, which will then be uploaded on the
website of exchanges before commencement of trading.

As of now, the shareholding pattern of companies is contained in initial public offer

document and upon listing, companies file shareholding pattern with stock exchanges every
quarter.

In order to ensure updated public dissemination of shareholding pattern, SEBI has also asked
companies to disclose their revised shareholding pattern whenever the change exceeds +/- 2
per cent of the paid-up share capital of the company post a corporate event.

SEBI has asked companies to file revised shareholding pattern with the stock exchanges
within 10 days from the date of such change in the capital structure.

Also, companies have to classify shares held by custodians, against which depository receipts
have been issued, as 'promoter/promoter group' and 'non-promoter', in their quarterly
disclosures, SEBI said.

4. Does the Source of Capital Affect Capital Structure?

21 Apr 2009

Prior work on leverage implicitly assumes capital availability depends solely on firm
characteristics. However, market frictions that make capital structure relevant may also be
associated with a firm’s source of capital. Examining this intuition, we find firms that have
access to the public bond markets, as measured by having a debt rating, have significantly
more leverage. Although firms with a rating are fundamentally different, these differences do
not explain our findings. Even after controlling for firm characteristics that determine
observed capital structure, and incrementing for the possible endogeneity of having a rating,
firms with access have 35% more debt.

5. Nokia posts 69 per cent profit drop in fourth quarter, loses market share to rivals
news 22 January 2009

Nokia Oyj, the world's largest mobile-phone maker, reported a bigger-than-estimated drop in
profit, reduced its dividend for the first time in seven years and forecast a 10 per cent slide in
industry sales.
Net profit was €576 million ($743.62 million), down from €1.84 billion in the same period in
2007. Sales fell 19.5 per cent to €12.7 billion, from €15.8 billion. The results came in below
expectations, sending Nokia shares down more than 5 per cent in Helsinki to €9.66 ($12.47).
The stock lost 58 per cent in 2008, its worst annual decline since at least 1992.

Nokia sold 15 per cent fewer phones in the quarter than a year earlier and cut its industry
sales forecast for a third time since November. The global economic crisis has hurt consumer
demand, leading competitors Motorola Inc. and Sony Ericsson Mobile Communications Ltd.
to post losses. Espoo, Finland-based Nokia plans to preserve cash by cutting costs and its
dividend.

Nokia proposed cutting its 2008 dividend to 40 cents from 53 cents the previous year, the
first cut since the payout for 2001. Nokia said profitability at its main devices and services
unit would be lower in the first half. It forecast an operating margin of more than 10 per cent
in the first half and between 13 per cent and 19 per cent in the second half. It had previously
predicted the margin would be in the teens for the entire year.

''In recent weeks, the macroeconomic environment has deteriorated rapidly, with even weaker
consumer confidence, unprecedented currency volatility and credit tightness continuing to
impact the mobile communications industry,'' CEO Olli-Pekka Kallasvuo said in the
statement. ''We are taking action to reduce overall costs and to preserve our strong capital
structure.''

The company aims to cut annual costs at the devices and services unit by more than 700
million euros by the end of 2010. The fourth-quarter operating margin excluding one-time
items was 12.1 per cent, down from 22.8 per cent a year earlier. Earnings per share excluding
one-time items and issues related to purchase-price accounting fell to 26 cents from 48 cents
a year earlier. Analysts had predicted earnings of 30 cents on that basis. Nokia booked €747
million of charges, mainly for goodwill amortization and restructuring measures.

6. Why Capital Structure Matters

APRIL 21, 2009

By MICHAEL MILKEN

Thirty-five years ago business publications were writing that major money-center banks
would fail, and quoted investors who said, "I'll never own a stock again!" Meanwhile, some
state and local governments as well as utilities seemed on the brink of collapse. Corporate
debt often sold for pennies on the dollar while profitable, growing companies were starved
for capital.

If that all sounds familiar today, it's worth remembering that 1974 was also a turning point.
With financial institutions weakened by the recession, public and private markets began
displacing banks as the source of most corporate financing. Bonds rallied strongly in 1975-
76, providing underpinning for the stock market, which rose 75%. Some high-yield funds
achieved unleveraged, two-year rates of return approaching 100%.

The accessibility of capital markets has grown continuously since 1974. Businesses are not as
dependent on banks, which now own less than a third of the loans they originate. In the first
quarter of 2009, many corporations took advantage of low absolute levels of interest rates to
raise $840 billion in the global bond market. That's 100% more than in the first quarter of
2008, and is a typical increase at this stage of a market cycle. Just as in the 1974 recession,
investment-grade companies have started to reliquify. Once that happens, the market begins
to open for lower-rated bonds. Thus BB- and B-rated corporations are now raising capital
through new issues of equity, debt and convertibles.

7. The Target Capital Structure

By Analia Jones

Firms can choose whatever mix of debt and equity they desire to finance their assets, subject
to the willingness of investors to provide such funds. And, as we shall see, there exist many
different mixes of debt and equity, or capital structures - in some firms, such as Chrysler
Corporation, debt accounts for more than 70 percent of the financing, while other firms, such
as Microsoft, have little or no debt.

In the next few sections, we discuss factors that affect a firm's capital structure, and we
conclude a firm should attempt to determine what its optimal, or best, mix of financing
should be. But, you will find that determining the exact optimal capital structure is not a
science, so after analyzing a number of factors, a firm establishes a target capital structure it
believes is optimal, which is then used as a guide for raising funds in the future. This target
might change over time as conditions vary, but at any given moment the firm's management
has a specific capital structure in mind, and individual financing decisions should be
consistent with this target. If the actual proportion of debt is below the target level, new funds
will probably be raised by issuing debt, whereas if the proportion of debt is above the target,
stock will probably be sold to bring the firm back in line with the target debt/assets ratio.

Capital structure policy involves a trade-off between risk and return. Using more debt raises
the riskiness of the firm's earnings stream, but a higher propor- tion of debt generally leads to
a higher expected rate of return; and, we know that the higher risk associated with greater
debt tends to lower the stock's price. At the same time, however, the higher expected rate of
return makes the stock more attractive to investors, which, in turn, ultimately increases the
stock's price.

8.Largest private-equity deal called off on solvency measures news

11 December 2008

A year and a half after it was struck, then the largest private-equity deal in history, the $41
billion leveraged buyout of the Canadian telephone company BCE Inc collapsed Wednesday
when a valuation expert at auditing firm KPMG LLC issued a final opinion that the
transaction would create an insolvent entity

The development was not entirely unexpected since the auditing firm came out with its
adverse report late last month. KPMG, BCE's accountants, said that the company that would
emerge from the deal would fail a solvency test because of its huge debt load.

BCE struck the C$42.75 a share cash deal to be bought by the Ontario Teachers' Pension
Plan, along with US-based private equity firms Providence Equity Partners, Madison
Dearborn Partners and Merrill Lynch Global Private Equity nearly 18 months ago. One of
the conditions to closing the deal was receipt of a solvency opinion from a recognised
valuation firm. In a statement, the buyers said they terminated the agreement because KPMG
had concluded, "a required test for the solvency opinion was not met."

They said that under these circumstances "neither party owes a termination fee to the other."
Under the agreement, the buyers are to pay a C$1.2 billion termination fee under certain
conditions. There has been speculation that there could be a battle over the break-up fee. One
trader said on Wednesday that he thought it could end up in court.

The deal's collapse means that the banks that agreed to finance the deal will be relieved of
their obligations.

Wall Street banks have suffered billions of dollars in losses on financing leveraged buyouts
deals reached during the private equity boom of 2006-2007. The banks underwriting the
buyout are Citigroup, Deutsche Bank, Royal Bank of Scotland and Toronto-Dominion Bank,
which collectively agreed to provide financing of $34.35 billion.

However, they will take a minor hit in the form of loss of advisory fees. Typically, such fees
are paid on completion of a deal.

9.Optimum Capital Structure

By Chris Mehta

Capital structure refers to the mix of sources from where the longterm funds required in a
business may be raised, i.e., what should be the proportions of equity share capital,
preference share capital, internal sources, dentures, and other sources of funds in the total
amount of capital which an undertaking may raise for establishing its business.

It is a framework of different types of financing employed by a firm to acquire resources

necessary for its operations and growth. Commonly, it comprises of stockholders'
investments (equity capital) and long-term loans (loan capital), but, unlike financial structure,
does not include short-term loans (such as overdraft) and liabilities (such as trade credit).

It refers to a corporate finance. For an example a firm introduced a business the owner
invested 100 billion and 30 billion was return and 70 billion is gone as bad debt The firm's
ratio of debt to total financing, 80% in this example, is referred to as the firm's leverage.

The capital structure is said to be optimum structure when the firm has selected such a
combination of equity and debt so that the wealth of firm is maximum. At this structure the
cost of capital is minimum and market price per share is maximum.

There are different schools of thought as far as the capital structuring theories are concerned.
The Net Income Approach, Net Operating Income Approach and the Traditional Approach
are the three main methods used to compute the Optimum Capital Structure.

It is however, difficult to find out optimum debt and equity mix where this structure would be
optimum because it is difficult to measure a fall in the market value of an equity share on
account of increase in risk due to high debt content in the capital structure.
10. EMERGING TRENDS IN CAPITAL STRUCTURE DECISSIONS

Nov 07, 2009

Indian firms are generally known of depending heavily on institutional borrowing for funding
business needs. This might cause major impediments for such investments since lenders
particularly, the institutional funding from expanding its operations to new risky ventures
until their dues are settled.  Similarly, persistent use of high level of debt increases the fixed
cost and in that process, return on equity suffers heavily.  It would be difficult to raise equity
finance with such poor track record for many companies.

 In addition to these reasons, firms, which have allotted shares to institutional investors, face
yet another constraint.  Institutional investors may also insist the firms to pay liberal
dividends and require firms to approach the market for funding new investments. 

Hece, firms need to consider the long-term impact while borrowing capital from financial
institutions or issuing equity to certain types of shareholders.  Since these capital Providers
can effectively put a block on the freedom of firms to spend capital, capital structure assumes
importance for strategies that require large scale funding for implementation.         

11. Capital Structure Of A Company

Apr09,2010

The capital structure of a company is referred to the way in which the company finances itself
through debts, equity and securities; it can therefore be referred to as the capital composition
of the company taking into consideration its liabilities, Modigliani and Miller propose the
Modigliani Miller theorem of capital structure which states that the value of a company in a
perfect market is unaffected by the way the company is financed but through the capital
structure it employs.

Other theories to describe the capital structures employed by a company include the trade off
theory, the agency cost theory and pecking order theory, and however the Modigliani Miller
theory provides the basis at which a modern company should determine its capital structure.

The trade off theory recognizes that capital raised by firms is constituted by both debts and
equity, however the theory states that there is an advantage of financing through debts due to
tax benefit of the debts, however some costs arises as a result of debt costs and bankrupt costs
and non bankrupt costs. The theory further states that the marginal benefit of debts declines
as the level of debts and at the same time the marginal cost of debts increases as debts
increase, therefore a rational firm will optimize by the trade off point to determine the level
of debts and equity to finance its operations.