Rupert Murdoch's New America Holdings Inc. increased its high-yield bond offering to $400 million from $300 million Friday after cheapening the deal slightly to raise more money, high-yield and other sources said.
"There was considerable interest in the deal. The market told us that you needed an interest rate of 12% to do that kind of a deal," a company spokeswoman said, "You pay a little premium for size, but [it's] not substantial."
Price talk on News America's deal started at 11 1/4% to 11 1/2%, and moved to 11 1/2% to 11 3/4%. The notes, due in 2001, were finally priced at 12%, one high-yield source said.
The senior notes are guaranteed by Australia-based News Corp. Ltd., News America's parent. The notes are noncallable for five years. Morgan Stanley & Co., Allen & Co., and Citicorp Securities Markets Inc. underwrote the offering.
The company also priced an equity offering Friday. The deal originally consisted of 37.2 million ordinary shares, with News Corp. offering 16.1 million American Depositary Shares -- consisting of two ordinary shares each in the United States -- and five million ordinary shares outside the United States. The company decided to increase the deal by five million ordinary shares bringing it to 42 million shares totaling approximately $404.3 million.
News Corp. will use proceeds from both offerings to reduce debt, strengthen its financial position and add to working capital. Rupert Murdoch is News Corp.'s chairman and chief executive.
News America Holdings is News Corp.'s primary U.S. subsidiary. News Corp. owns two U.S. newspapers, the Boston Herald and the San Antonio Express-News, plus Mirabella, TV Guide, HarperCollins Publishing, Twentieth Century Fox Film Corp., Fox Film, Twentieth Century Television Corp., Fox Broadcasting Co., and seven Fox television stations, a company spokeswoman said.
Another high-yield issuer, Playtex Family Products, also tapped the market Friday. Playtex issued $150 million 11 1/2% senior secured noted due 1997. The notes were priced at 99.50 to yield 11.625%. The bonds can be called after the third year at 103, after the fourth year at 101.50, and then at par until maturity, a high-yield analyst said. Moody's rates the offering Ba3, while Standard & Poor's rates it B. BT Securities Corp. managed the offering.
The high-yield market overall was unchanged in secondary trading Friday, while high-grades lost about 1/8 point in the 10-year slot.
Also issuing Friday was the Federal National Mortgage Association, which issued $150 million of 5.55% medium-term notes at par. Noncallable for a year, the notes due in 1994 were priced to yield 14 basis points over comparable Treasuries. Lehman Brothers Inc. sole managed the offering.
In rating action Friday, Standard & Poor's upgraded Northern Indiana Public Service Co.'s senior secured debt to A-minus from BBB-plus and its senior unsecured debt and preferred stock to BBB-plus from BBB. The agency affirmed company's commercial paper program at A2 and raised parent company NIPSCO Industries Inc.'s preferred stock rating to BBB from BBB-minus. Standard & Poor's affirmed the parent's commercial paper program at A2.
Northern Indiana Public Service has approximately $1.2 billion of debt and $156 million of preferred stock outstanding. NIPSCO Industries has about $35 million of preferred stock outstanding.
"The rating action refects an improved financial profile achieved in recent years owing to diminished capital spending, aggressive cost control, and refinancing of higher-cost securities," a Standard & Poor's refease said.
Forest Oil Corp.'s CCC subordinated debt rating remains on Standard & Poor's CrediWatch, where the agency placed it on Feb. 14. It has revised the implications to positive from developing, it said. The implied senior debt rating is B-minus. The preferred stock rating is C because the company currently pays no dividends on preferred stock.