Sky News

18 March 2003

On past form, that won’t come at the expense of News Corp’s influence over BSkyB. Rupert Murdoch continues to clean up his balance sheet, this time refinancing a convert issued in 1996.

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News Corporation, via its News America subsidiary, is issuing a $1.35bn bond convertible into shares in BSkyB. Proceeds from the bond will refinance about $700m of an existing $1bn Sky convertible, issued in 1996, which is now out of the money.

The new security, a beneficial unofficial convertible security, has a 20 year term and a 0.75% coupon. Investors have the right to convert into Sky shares after a year, and to put the bond back to News America after 10, 13 and 18 years. The joint bookrunners, JP Morgan and SSSB, are bookbuilding in the course of March 18 on the basis of a conversion premium of between 36% and 38% to the share price at closing. On that basis, the implied volatility is about 39%.

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