750 million euro from bonds Nokia seeks to help power fightback

HELSINKI (Reuters) - Mobilephone maker Nokia plans to raise 750 million euros (£611.89 million) by issuing convertible bonds to bolster its cash position as it battles to claw back market share lost to Apple and Samsung.
Once the world's biggest mobile phone maker, the Finnish firm has fallen far behind Apple's iPhone and Samsung's Galaxy phones in the lucrative smartphone market, and is pinning its hopes for recovery on new models that go on sale next month.
With its net cash falling to 3.6billion euros in September from 4.2 billion in June, and its credit ratings cut to junk over the past year, analysts have said the company needs to show a turnaround in the next several months if it is to survive.
"It is a rather cheap way to get extra financing," said Evlianalyst Mikko Ervasti of the plan to issue convertible bonds, which are potentially most lucrative to investors when they are converted into shares several years afterthey are issued.
"They need buffers (and) their 2014 bond also requires financing," he added.
Nokia finished the third quarter with 3.8 billion eurosin interest-bearing liabilities, with 1.75 billion in bonds and loans maturing in 2014. The company also owns half of network equipment venture Nokia Siemens Networks, which finished thequarter with 1.4 billion eurosin liabilities.
The convertible bonds will be due in 2017 and will paya coupon between 4.25 percent and 5.00 percent. The initial price for conversion into ordinary shares is expected to be 28-33 percent above the average price of Nokia sharesbetween the launch and pricing of the offering.
At 0905 GMT, Nokia shares, which have been volatile in recent sessions, were down 5.1 percent at 2.05 euros.
LUMIA 510
Nokia's fortunes hinge on its top-of-the-range Lumia 820 and 920 models, which run on Microsoft's new Windows Phone 8 software, come in vivid colours, have high-resolution cameras, andwill hit the stores in November.
On Tuesday, the group unveiled the lower price Lumia 510, which is an update of the Lumia 610 butdoes not use the newest version of Windows software.The 510 has a larger screen and will be sold for around$199, excluding taxes and subsidies.
ING analysts welcomed the convertible bonds plan as reducing uncertainty aroundNokia's short-term debt maturities and bolstering its capital.
"It also shows that the company is taking the question marks around its credit quality seriously and iswilling to take the steps necessary to improve this," they said in a research note.
Nokia's five-year credit default swaps were trading around 2.8 percent tighter in early trading, signalling a reduction in the cost of insuring the company againstdefault.
The final terms of the convertible bonds, includingthe conversion price and maximum number of shares which may be issued upon conversion, will be announced later in the day. Trading in the bonds are due to start around October 26.

Billionaire Ross Interested in Buying Spanish Bank Assets

Wilbur Ross , the billionaire who’s taken stakes in distressed U.S. and Europeanlenders, said he’s interested in Spanish banking assets as the country takes steps to resolve bad loans stemming from its real-estate bubble.
Ross’s WL Ross & Co., which holds about 10 percent of Bank of Ireland Plc. (BKIR) and teamed up with Richard Branson to buy part of Northern Rock Plc, is in talks “almost every week” with representatives of the large Spanish banks , he said in an interview in Abu Dhabi , without naming potential targets.

Employer Securities (ES)

Employer Securities An investment option offered by some retirement plans that generally consists of stock in the corporation sponsoring the plan for its employees

Equity Wash Restriction (EWR)

Equity Wash Restriction A provision in certain stable value or fixed income products under which transfers made from the stable value or fixed income product are required to be directed to an equity fund or other non-competing investment option of the plan for a stated period of time (usually 90 days) before those funds may be invested in any other plan-provided competing fixed income fund (such as amoney market fund)

Exchange-traded Fund (ETF)

Exchange-traded Fund (ETF) A type of investment company whose shares tradeon stock exchanges at prices determined by the market. Compare to Mutual Fund

Face Value (FV)

Face Value The amount a bond issuer is required to repay investors on the bond’s maturity date

Fixed Income Securities (FIS)

Fixed Income Securities Investments with specified payment dates and amounts,primarily bonds that pay interest. Front-end Load An upfront sales charge investors pay when they purchase mutual fund shares, generally used by the fund to compensate brokers. A front-end load reduces the amount available to purchase fund shares.

world economy will be weak caterpillar says as it cuts outlook.

Caterpillar says the world's economy is weaker than it thought,and it doesn't expect growth to pick up untilthe second half of nextyear.
The company on Monday cut its 2012 revenue and profit guidance, and said next year won't be much better.
Caterpillar makes the yellow-painted excavators, heavy tractors, and other construction equipment often seen on road-building projects. It's the world'slargest maker of construction and mining equipment, and also makes engines, so its results are watched closely forsigns of where the broader economy is headed.
Where it's headed rightnow is for some weak growth, based on whatCaterpillar was saying on Monday.
It predicted worldwideeconomic growth of 2.7 percent for next year, up from the 2.5 percent growth it expects for 2012. It expects the cheap lending offered in mostcountries to continue next year, although"growth has been slow to respond," the company said.
"As a result, we are not expecting improvement in overalleconomic growth untilthe second half of 2013," the company said.
Caterpillar sells to dealers, who turn around and sell to end users like construction and mining companies.Those dealers are tryingto cut inventory, so they're ordering less equipment than customers are buying.
In response, Caterpillar said it has reduced production, resulting intemporary shutdowns and layoffs. Lower production will continue until dealer demand lines up with end user demand, Caterpillar said.
As a result, Caterpillar cut its 2012 outlook for the second time this year. Revenue is expected to grow 9.7 percent to $66 billion, after rising 41 percent in 2011. Profit is now forecast at $9 to $9.25 per share, down from aprevious forecast of$9.60 per share.
Analysts surveyed by FactSet had expected revenue of $67.2 billion, with profit of$9.41 per share.
The economy this year"has been a disappointment," Caterpillar said, with growth lower than expected in the U.S. and China, and with much of Europe in recession.
Caterpillar expects 2013 revenue to be about the same as this year, in a range of up 5percent to down 5 percent.
"We're not expecting rapid growth, and we're not predicting a global recession," Chairman and CEO Doug Oberhelman said.
The company said salesof mining gear will fallnext year. Lower prices for metals and coal, along with higher operating costs, have hurt profit margins at many mining companies, Caterpillar said. Sales of construction gear are expected to increase, and it expects improving activity in the U.S. It expects engine sales to be flat.
Profit in the third quarter rose 49 percentto almost $1.7 billion, or $2.54 per share. Thatcompares with profit of$1.14 billion, or $1.71 per share, a year earlier.Revenue rose 4.6 percent to $16.45 billion.
The results included a gain of $273 million, or 27 cents per share, from selling a majority interest in a logistics business. Analysts surveyed by FactSet had been expecting a profit of $2.21 per share, on revenue of$16.64 billion.

Ancestry.com AgreesTo Buyout By Private Equity Firm

After months of speculation about a possible buyout, Ancestry.com ( ACOM ) announced Monday that it is being purchased by an investor group led by European private equity firm Permira.
Permira and co-investors have agreed to pay $32 a share in cash for Ancestry.com, the world's leading online genealogy service. The deal is valued at $1.6 billion. The transaction represents a 41% premium over Ancestry's closing priceon June 5, the last trading day before press reports leaked that Ancestry had retained a financial adviser in connection with a possible sale of the company. Ancestrystock closed Friday at 29.18 and was up 8%, at 31.50, in early trading Monday.
Ancestry CEO Tim Sullivan and CFO Howard Hochhauser will maintain a majority of their equitystakes in the company as part of the transaction. Spectrum Equity, which owns 30% of the company's outstanding shares, alsowill remain an investor in the company.
Ancestry.com has morethan 2 million subscribers for its online family history service. Over the past 15 years, Ancestry has assembled a worldwidecollection of more than 10 billion digitized and indexed records. It has grown through acquisitions, most recently picking up companies like Archives.comand 1000memories.
"We're excited that Permira shares our commitment to keep investing in our technology and product experience to make family history easy and accessible for more and more families around the world," Sullivan said in a statement . "Their strong investment trackrecord in the technology and Internet sectors makes them a terrific adviser and partner as we take the company forward."
Ancestry expects the deal to close in early 2013, pending shareholder approvals.
Ancestry.com and Permira said the company will continueexecuting on its growth strategy and initiatives led by content acquisition and technology investment, including the company's new DNA service.

Bank of Queensland (BOQ) denies it's a takeover report

THE head of the Bank of Queensland(BOQ) has rejected speculation that his company is now a takeover target afterit posted the first loss by an Australianbank in two decades. Chief executive Stuart Grimshaw saidthe worst was behind the bank, just days after declaring a $17 million full year loss due to $401 million in costs from unrecoverable loans. Mr Grimshaw deniedthe bank would haveto be taken over at some point. "No I don't think that's the case," he said. "When we recorded a loss in the first half, that was about a $90 million after tax loss, the second half we reported a$70.3 million dollar profit." While the Bank of Queensland was exposed to bad debts in the southeast corridor of Queensland, it still had a great future, Mr Grimshaw told ABC's Inside Business program onSunday. "We believe we haveseen the worst. "It won't be an instantaneous returnto like 2006 bad debt expense levels, but we believe that within the next threeyears we will return to a level similar to that." He said the cost of deposits was increasing. "We've actually beenable to manage both sides of the balance sheet prettywell in what's been avery tough and competitive market." The company shed 100 management roles about four weeks ago after highlighting seven layers of people between the chief executive and customers. "In a small bank that's just way too many," Mr Grimshawsaid. "In Bank of Queensland Finance,and even at the bank, we have a number of people doing roles which could be better shared rather than isolated." Mr Grimshaw confirmed the bank's funding was made up of 59 per cent deposits and 41 per cent wholesale funding. Around 40 per cent of its business was now done outside Queensland, with 29branches in Western Australia, 35 in Victoria and 42 in NSW. He added that the bank was not interested in being afunds manager or a large institutional bank. "We're not going to bank every agri-business in Australia." On Friday BOQ shares closed 11 cents, or 1.5 per cent, higher at$7.38.