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VALUATION OF STOCK

AND DEBTS
Submitted To: Dr Sateesh

Submitted To: Sanket Sunil Shinde
Student Id- 18080

.................................... 2 CASE 2: Wal-Mart Stores.................................................................... 6 CASE 6: Higher Valuation of Stock Causes Tension at United ............................................................................ 5 CASE 5: Alon Blue Square Israel announces results of Court appointed expert’s valuation of Co ..................... 7 ....................................CONTENTS VALUATION OF STOCK AND DEBTS ......... Announces Cash Tender Offers for Certain of its Outstanding Debt Securities ....................................................................... 2 CASE 1: MAHARASTRA STATE WANTS A TOP-UP LOAN OF RS 20.................................................................. Inc............................... 4 CASE 4: The 1 Big Reason Dominion Energy Is a Better Value Stock than Duke Energy ..................... 3 Case 3: Stock-trade clearing house to use block chain technology ..000 CR ............

Deshpande further proposed that although the state has run up massive debts.It is possible to attain the level of $1 trillion in another 8-10 years. however.VALUATION OF STOCK AND DEBTS CASE 1: MAHARASTRA STATE WANTS A TOP-UP LOAN OF RS 20. who did not wish to be named. debt can always be taken care of. coupled with fiscal prudence. they cautiously pointed out that the target set by Fadnavis can be achieved only if the growth rate is 10 per cent over the next eight to 10 years. pegged at around $450 billion at present. . Services and manufacturing have always been the growth drivers and they need to be strengthened further. so a lot of room is still left for maneuvering. along with rising employment. Officials of the finance department. While loan waivers and unproductive subsidies need to be phased out. While Rs 20. According to guidelines laid down by the 14th Finance Commission.13 lakh crore. there is no alternative to rapid growth with faster employment generation in the non-farm sectors.000 crore towards farm loan waiver. insisting that they would be able to meet the norms of fiscal prudence effortlessly. Chief Minister Fadnavis kept up the high hopes when he tweeted just before leaving for Davos to attend the World Economic Forum meeting that Maharashtra is all set to become $1 trillion economy in the years to come. continued to paint a rosy picture. the government had issued a notification asking departments to cut their revenue expenditure by 30 per cent and capital expenditure by 20 per cent. labour. Our assumption. The Maharashtra government has to make and sustain investment-friendly climate through pragmatic policies on land.33 lakh crore in the current financial year. it will push up the government’s total loan burden to Rs 4. Earlier in July last year. power tariff concessions and expenditure on irrigation project. The notification particularly mentions that the state is going through a financial crunch due to the farm loan waiver. whereas Maharashtra’s total debt repayment is going to be around just 11. This apart.000 crore will be over and above the Rs 41. it will require continuously high GDP growth of about 7-8 per cent per annum. Our total debt stock is just between 16 per cent and 17 per cent of the SGDP. As per the state’s budget estimates. the total debt stock of the government should not exceed 25 per cent of the state’s gross domestic product (SGDP).37 per cent. While financial experts do not doubt the potential of Maharashtra’s economy. ease of doing business and better managed infrastructure.000 CR The Maharashtra government has sought the Centre’s permission to borrow additional Rs 20. However. in the medium-to-long term.997 crore that the state has approvals to borrow in the 2017-18 fiscal year. compensation that it has to pay to municipal bodies due to revenue losses because of GST.000 crore to meet expenses of around Rs 25. –as If GDP grows rapidly. its total debt stock at the end of the fiscal is projected to be around Rs 4. several past moves of the government have fuelled worries about the government’s finances. The official further said that according to prudent financial norms. what matters is the Debt-to-State GDP ratio. the first state in country to achieve the milestone. the total debt repayment should not exceed 20 per cent of the total budget’s size. the move raising serious questions about the state’s financial health at a time when Chief Minister Devendra Fadnavis has set the target to achieve a $1 trillion economy in the coming years. This is again an indicator that there is nothing to worry about the state’s financial health.” said a senior official from the finance department.

plus accrued and unpaid interest on the applicable series of Dollar Securities and Sterling Securities (collectively. Announces Cash Tender Offers for Certain of its Outstanding Debt Securities Wal-Mart Stores. CASE 2: Wal-Mart Stores. The Maximum Dollar Amount and the Maximum Sterling Amount (collectively. Brett Biggs. and including. just as it did for the transactions completed in calendar 2017. Executive Vice President and Chief Financial Officer mentioned with the tender offers it marked the completion of 2017. 2018 and in the related Letter of Transmittal (as it may be amended or supplemented from time to time. the Tender Offers allow them to take advantage of the favorable interest rate environment and reduce our interest expense prospectively. the most recent interest payment date for such series of Securities prior to the applicable Payment Date to.000 aggregate purchase price.000. including principal.000. together with the Offer to Purchase. Securities that are accepted in the Tender Offers will be purchased. but excluding Accrued Interest (the “Maximum Sterling Amount”) In each case. retired and canceled by Walmart and will no longer remain outstanding obligations of Walmart.but excluding Accrued Interest (the “Maximum Dollar Amount  up to $650. the “Securities”) from. Inc. the “Offer Documents” Capitalized terms used in this announcement but not defined have the meanings given to them in the Offer to Purchase. premium and the applicable Early Participation Amount. premium and the applicable Early Participation Amount . Rationale for the Tender Offers They are making the Tender Offers to purchase certain outstanding debt securities issued by Walmart to reduce our interest expense. . including principal.000. the “Maximum Amounts”) will not be subject to amendment by Walmart. 2018 that it has commenced cash tender offers for:  up to $4. the “Letter of Transmittal” and. the applicable Payment Date (“Accrued Interest”). They expect to record a charge for this discrete item upon completion of the Tender Offers.000 aggregate purchase price. but not including. Each of the Dollar Tender Offer and the Sterling Tender Offer is made upon the terms and subject to the conditions set forth in the Offer to Purchase dated January 9. Inc announced on Jan 09.

Case 3: Stock-trade clearing house to use block chain technology With stock markets across the globe increasingly embracing block chain’s native capabilities as the basis for market transactions. Sebi is taking early steps to understand how the technology is being used in markets globally and can possibly derive the benefits gradually. In 2015. mainly due to the role of intermediaries. including the NYSE and Deutsche Borse. repo and margin financing and monitoring systemic risk. regulators and stock exchange are required to go through a cumbersome process (which takes 3+ days to complete transactions. for conducting research on the block chain platform and other technologies that have been making waves in the sphere of fundraising. operational trade clearance and regulatory processes). while securely automating the post- trade process. have already showed their intent to evaluate the feasibility and advantages of blockchain. It can help reduce huge costs levied on customers in terms of commission while speeding up the process for fast transaction settlements. Blockchain can make stock exchanges much more optimal through automation and decentralization. Recently. since the rules and regulations would be in-built within smart contracts and enforced with each trade in order to register transactions with the blockchain network acting as a regulator for all transactions. called Committee on Financial and Regulatory Technologies (CFRT). which operates the Tokyo Stock Exchange. The technology can have viable use in clearing and settlement. Sebi appointed an advisory committee. . brokers. easing paperwork of trade and legal ownership transfer of the security. Stock market participants such as traders. to use blockchain as its core trading infrastructure. Blockchain can be the answer to interoperability. Blockchain can eliminate the need of third party regulator to a large extent. Blockchain offers huge potential for tracing securities lending. the Securities and Exchange Board of India (Sebi) is exploring how block chain technology can be used in the Indian stock market. Blockchain can eliminate the need of third party regulator to a large extent. since the rules and regulations would be in-built within smart contracts and enforced with each trade in order to register transactions with the blockchain network acting as a regulator for all transactions. Japan’s Financial Services Agency has allowed the Japan Exchange Group. asset management and post-trade settlement. trust and transparency issues in fragmented market systems. Many market regulators and global exchanges across geographies. NASDAQ unveiled the use of its Nasdaq Linq blockchain ledger technology to successfully complete and record private securities transactions.

but dividend growth is projected to be as high as 10% a year. That's around twice what Duke is projecting and roughly three times the historical growth rate of inflation. its capital spending plans could run as high as $4. a costly project that should soon start to add to results. CASE 4: The 1 Big Reason Dominion Energy Is a Better Value Stock than Duke Energy Duke Energy provides electricity to 7. however. Dividends Both Duke and Dominion are income investments. Duke is only expecting to grow the dividend by roughly 5% a year. Duke. A successful purchase here would boost earnings growth but is not expected to impact the company's dividend plans. Thus. both Duke and Dominion have performed relatively well. First. The utility is also nearly finished building a new natural gas power plant (roughly 75% complete) with an expected in-service date in late 2018. which is a far more compelling entry point for investors. Midwest. And it's the real reason why Dominion is a better value investment than Duke when comparing these two currently out-of-favor U. growing its natural gas business. and Florida. less than what is expected at Duke. Kentucky. Duke and Dominion are two of the biggest utilities in the United States. near their highest levels over the past five years. suggesting it's trading at just a slight discount. in fact. is only about 2.6 million electric customers in Virginia and North Carolina and supplies natural gas to roughly 2. Duke's dividend has been increased for 13 consecutive years. But there's one more thing you need to examine before making your choice. Dominion recently completed construction of the Cove Point natural gas liquefaction facility. Duke has a number of attractive opportunities to grow its business.5%. which is evidenced by their $54 billion and $48 billion respective market caps. Dominion is about 12% below its comparable figure. Dominion's growth opportunities are similar. In addition. and expanding its renewable power portfolio. That could be shortsighted because it ignores the dividend growth prospects of each utility. including capital investment in its regulated electric assets. and the Carolinas. lead some to favor that company's shares. Tennessee.6% and Dominion 4. Both are currently trading below their five-year average enterprise value to EBITDA ratios. Dominion's controlled limited partnership allows it additional access to capital. Over time. The second difference is more meaningful. Duke's slightly higher yield might. Dominion Energy serves around 2. While Dominion's valuation appears lower today. these two large utilities are pretty similar.S. the company is in the middle of an attempt to acquire smaller peer SCANA Corporation. while Dominion's dividend has gone up each year for 15 years.2 billion per year over the next three years. providing cash that management plans to use to pay down debt and reward shareholders.4 million customers in the Carolinas. So far. It's on the valuation front where we start to see a difference. to ignore the income component when considering these two stocks would be a huge mistake. providing income investors a steady stream of dividends. So Dominion has already spent a lot of time and money on projects that are set to bear fruit. which for some would be enough to make it a better value stock. It also distributes natural gas to around 1.5 million customers in Ohio. even with plans to spend $34 billion on capital projects between 2018 and 2022.5% below its five year average. utilities.3 million customers across five states. but there are a couple of notable differences. Duke currently yields 4. . However.

We note that the rating does not factor in the debt arrangement proposed to financial creditors as these are defined in the debt arrangement (as defined below) due to the uncertainty involved in its materialization.. as elaborated below. You are getting a fair deal on a large utility with a sizable yield. which should clear up if the compromise arrangement is approved. The Debt Arrangement includes. based on the expected recovery rate table in the Midroog Rating Scales and Definitions" document. Moti Ben-Moshe ("the Buyer"). CASE 5: Alon Blue Square Israel announces results of Court appointed expert’s valuation of Co Since October 2015. the additional infusions of up to ILS 600 million altogether will serve to repay debt to the financial creditors and for the Company's ongoing cash flow needs. Generally speaking. Concurrently with the Debt Arrangement. After all. presented in the "Long-Term Credit Ratings for Defaulted or Impaired Securities" section. Alongside developments since the last monitoring report. which will serve to repay debt to the financial creditors (as they are defined in the Debt Arrangement) under the terms set forth in the arrangement. Analysis of the recovery rate for bondholders is within the range of the assigned rating level and stands. we estimate. which is why Dominion's dividend growth projections make it a better value stock. The Debt Arrangement sets out a plan for additional infusions by the Buyer over certain periods of time. the Company approved a compromise with Mega that settles the mutual claims between the parties. and debts on two claims submitted against Blue Square and Mega ("the Compromise Arrangement").and dividend growth potential that is materially better than what you'd get from Duke. and on the Company's obligations as of June 8. Motley Fool Stock Advisor. The Company shall have . the rating factors in the uncertainty involved in the materialization of the compromise arrangement with the Mega trustees (as defined below). according to the Company's announcements2. the rating factors in uncertainty regarding the volume and quality of various liabilities the Company may face from guarantees given to Mega and pending legal claims between the Company and Mega. and another sum that will serve the Company's immediate cash flow needs. Inc wasn't one of them! -. as set forth below. the newsletter they have run for over a decade. replacing a previous debt arrangement motion3 and that is contingent upon certain conditions that have yet to materialize. inter alia. the rating reflects our assessment of the recovery rate and the level of uncertainty in that assessment. David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now and Dominion Energy. Also. the Company's rating has reflected default as we define it1. unchanged from our assessment from January 2016. Meanwhile. in the range of 90% to 95%. it can pay to listen. inter alia. debts to credit insurers up to ILS 30 million. regarding which different terms were set. The Debt Arrangement is based on an agreement to buy Blue Square shares and additional assets by a company owned by Mr. 2016. even though Dominion's enterprise value to EBITDA ratio gives it the value edge.They think these 10 stocks are even better buys.Growth Neither Duke nor Dominion is a shockingly undervalued stock.. 2016. due to nonpayment of principal and interest on time. our assessments of the Company's volume of debt and assets have not substantially changed and rely on the market value of the tradable assets around the date of this report. including pledges on shares the Company owns in subsidiaries. On June 19. including approval by the financial creditors. and under which Blue Square will take upon itself the obligation regarding guaranteed bank debts. rescheduling of the outstanding debt to the financial creditors. has tripled the market. an infusion of ILS 300 million by the Buyer on the closing date. the Company submitted a debt arrangement motion to the court ("the Debt Arrangement"). But utilities are generally investments prized by investors for their income generation. When investing geniuses David and Tom Gardner have a stock tip. the Debt Arrangement includes. Given our definition of default.

The sale price for the claims translates into about $48 for each of the 125 million new shares to be issued upon exit from bankruptcy. including. an analyst at Merrill Lynch. totaling approximately ILS 1. Other United workers also hold unsecured claims.92%. both in the Blue Square proceedings and in the Mega proceedings. chief executive of United's parent. as follows: debt to financial creditors totaling ILS 933 million. Trading in those claims is a way. apparently hoping the airline does well enough to send its new shares higher. The $480 million valuation -. The others are holding on. If the Compromise Arrangement is approved and leads to clarity regarding these liabilities.based on recent trading in unsecured debt of United. the UAL Corporation. minus the cash balance. about $28 billion in unsecured claims held by workers. additional debts totaling ILS 200-280 million. that the claims would be worth 4 to 8 cents on the dollar. significantly more than an earlier estimate of $150 million. businesses and the federal agency that took over United pension plans will be converted into 125 million shares of common stock. About 20 percent of the pilots holding claims chose to sell. property lessees.no right of recourse to Mega or to the trustees' fund for these payments. . We also incorporated in the recovery rate the uncertainty regarding additional liabilities that the Company may face for guarantees it provided to Mega and for pending legal claims between it and Mega (including guarantees to suppliers. which converts into common stock when the company exits bankruptcy -is expected to be the most rancorous issue at a hearing Wednesday in Federal Bankruptcy Court. debt payments and legal proceedings in respect to Mega. debt to Blue Square Real Estate. including the shares that go to management. The airline earlier estimated. to invest in United stock. and more). That implies a value of about $6 billion for the company. Michael Linenberg. CASE 6: Higher Valuation of Stock Causes Tension at United The 10 million shares that 400 united executives are expected to divide up when the airline comes out of bankruptcy next month could be worth about $480 million. He added that the management stake of 8 percent would be valued at $480 million. of 53. 2016. it would increase our certainty regarding the recovery rate and could improve the rating. workers. and on the Company's obligations as of June 8. and is based on the market value of the Company's tradable assets around the date of this report according to Midroog's scenarios. The probability that the Compromise Arrangement will be approved is presently uncertain. Mega and its creditors will forgo any claims towards the Company. the current rating reflects a recovery rate for bondholders that we estimate to be in the range of 90% to 95%.25 billion (of which the value of the Company's holdings in Blue Square Real Estate. before the bankruptcy exit. The Compromise Arrangement still requires the approval of the secured banks (as defined in the Compromise Arrangement) and of the court. Tilton. and the joint creditors (as defined in the Compromise Arrangement) will be repaid from the Mega trustees' fund only. and without considering liabilities to the controlling shareholders. wrote after the pilots' claims sale. and considering a certain extent of recovery the Company may achieve from Mega's liquidation fund4. As United prepares to exit bankruptcy. For Glenn F. approximately ILS 820 million). As said. but we believe it will clear up in the short term. the sharply higher value could mean a stock package of more than $40 million instead of about $15 million. based on the expected overall value of the company. credit insurers. among others: liability on coupons. debt payments and legal proceedings (not including those relating to Mega) and liquidation costs according to our assessment.