Feb. 11 (Bloomberg) -- Rupert Murdoch’s News Corp. sold $1 billion in bonds, joining Cisco Systems Inc. and Novartis AG in taking advantage of thawing credit markets to refinance debt and raise cash to fund operations.
The funds will be used for general corporate purposes, New York-based News Corp. said in a statement yesterday. The notes were rated Baa1, the third-lowest investment grade, by Moody’s Investors Service and an equivalent BBB+ by Standard & Poor’s. JPMorgan Chase & Co. managed the sale of debt, which was issued by News America Inc.
The sale allows the owner of the Wall Street Journal to replenish cash after slumping advertising sales and a writedown led to its first quarterly loss in more than three years. Bond issuances by U.S. corporations including News Corp. and Cisco have risen an estimated 38 percent this year as investor demand for debt pushes down borrowing costs.
News Corp., which bought Dow Jones from the controlling Bancroft family for $5.2 billion in December 2007, on Feb. 5 recorded an impairment charge of $8.4 billion before taxes in its fiscal second quarter, including a $2.8 billion writedown of the goodwill and intangible asset value of its Dow Jones & Co. unit.
The stock fell 6.2 percent to $6.36 in Nasdaq Stock Market composite trading and has tumbled 30 percent this year, the second-worst performer among 16 media companies listed in the U.S. and Canada and tracked by Bloomberg.
Cutting Workforce
News Corp.’s HarperCollins Publishers unit said yesterday it plans to reduce its workforce, cut costs and close two divisions to cope with the “unstable economy” and shrinking consumer spending. The book publisher is asking each of its units to lower expenses because of “continued uncertainty in the market and soft revenues for the company,” Chief Executive Officer Brian Murray told employees in a memo.
The terms of News Corp.’s latest sale contain a so-called poison put that would allow investors to sell the bonds back at 101 cents on the dollar if there is a change of control at the company.
The sale was split between $700 million of 10-year, 6.9 percent notes that priced to yield 410 basis points more than Treasuries of similar maturity, and $300 million of 30-year, 7.85 percent bonds that paid a spread of 437.5 basis points. The spread on the 30-year debt is 238 basis points more than the New York-based company paid on a similar issue in November 2007. A basis point is 0.01 percentage point.
http://www.bloomberg.com/apps/news?pid=20601103&sid=anRLHsnvD1fo&refer=news
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