News Corp. Ltd. Friday cut its junk bond offering to $850 million from $1 billion, citing "recent volatility in the U.S. debt markets."

"I'm told that the long end did very, very well, and the short end, there's still paper around," one trader said of the two-part deal late Friday.

A News Corp. spokesman said the deal's trimming will not hurt the company's overall financing plan, which also includes last week's global equity offering of 40 million ordinary shares.

Net proceeds from the debt and equity offerings will be at least $1.5 billion. That figure is "right in line with company expectations," the spokesman said.

News Corp. plans to use all proceeds from the debt and equity deals plus net proceeds from the $185 million sale of the San Antonio Express News to repay bank debt, he said. By applying those proceeds, the company will cut its existing bank debt to $4.5 billion, the spokesman said.

The first tranche of the two-part deal, done through the News America Holdings subsidiary and backed by News Corp., consisted of $550 million of noncallable 9.125% senior notes due 1999 at par.

The second consisted of $300 million of 10.125% senior debentures due 2012 at par. The bonds are callable after 10 years at 104.5.

Merrill Lynch & Co. lead managed the offering, assisted by Allen & Co.; Citicorp Securities Markets Inc.; Donaldson, Lufkin & Jenrette Securities Corp.; and J.P. Morgan Securities Inc.

News Corp. priced its global equity offered last Wednesday. That deal consisted of 40 million ordinary shares, including 18 million ordinary shares represented by American depositary shares offered in the United States and Canada.

The ordinary shares were offered at (Australian) $24.10, while the ADS were offered at U.S. $34.834 each, for a total of approximately $697 million. Underwriters also had the option to acquire up to an additional 6 million ordinary shares. Whether they will exercise that option remains unknown, the spokesman said.

Elsewhere Friday, Gaylord Container Corp. said the U.S. Bankruptcy Court for Louisiana's Eastern District has confirmed its prepackaged reorganization plan. The plan is scheduled to become effective on Nov. 2.

The company filed its prepackaged plan Sept. 11, 1992, after its bondholders, banks, and stockholders had voted to approve it.

After the effective date, Gaylord will issue about $377.7 million principal amount of new senior subordinated debt, six million shares of Gaylord Class A common stock and 31.8 million redeemable exchangeable warrants.

It will also pay about $37.4 million of interest, including about $10.7 million payable in additional debt securities, accrued from Jan. 1, 1992, through Nov. 2, 1992.

Gaylord is exchanging that package for its entire $582.8 million principal amount of subordinated debt plus approximately $133.5 million of accrued unpaid interest through Sept. 11, 1992.

In secondary trading Friday, high-yield bond prices lost 1/2 point. High-grade bonds finished a quiet day unchanged.

Also Friday, Coltec Industries issued $150 million of 9.75% senior notes due 1999 at par. The noncallable notes were rated Ba2 by Moody's and B-plus by Standard & Poor's. Morgan Stanley & Co. sole managed the offering.

Friday's Ratings

Standard & Poor's has downgraded Carolco Pictures Inc.'s senior debt to CC from CCC-minus and subordinated debt to C from CC. The agency said the ratings remain on CreditWatch, where it placed them on Dec. 12 with negative implications.

The actions affect about $49 million of debt.

"Carolco failed to make an interest payment due Oct. 15 on its unrated, privately placed convertible subordinated debt, the potential acceleration of which could trigger default provisions under both rated issues," Standard & Poor's said in its release. "In light of this provision and the company's continuing debt and liquidity pressures, the ratings remain on CreditWatch with negative implications."

Standard & Poor's has affirmed International Business Machines' and its units' AAA ratings for senior and subordinated debt. The rating outlook, however, remains negative, a Standard & Poor's release says.

The rated outstanding debt of IBM and units debt totals approximately $19 billion, the release says.

"S&P continues to have concerns about IBM's competitive position in the personal computer and storage markets, and the company's ability to stabilize these businesses," according to the release, "In addition, S&P will monitor the adverse effect on profitability of the persistent deterioration of the worldwide economies, particularly in Europe and Japan."

Standard & Poor's has given its CCC-plus rating to Dr. Pepper/Seven-Up Cos.' $633 million of principal senior subordinated discount notes due 2002.

The agency also affirmed its rating on the company's CCC-plus subordinated debt and removes it from CreditWatch, where Standard & Poor's placed it for a possible upgrade on Sept. 23.

Dr. Pepper/Seven-Up Cos.' implied senior rating is B. Standard & Poor's also affirmed subsidiary Dr. Pepper Co.'s B senior secured debt, CCC-plus subordinated debt and preferred stock ratings, and subsidiary Seven-Up Co.'s CCC-plus subordinated debt. The agency also removed those ratings from CreditWatch.

Duff & Phelps has lowered Westinghouse Electric and Westinghouse Credit's ratings to below investment grade.

The agency dropped Westinghouse Electric's senior debt to BB-plus from BBB-plus, subordinated debt to BB from BBB, and preferred stock to BB-minus from BBB-minus. It cut Westinghouse Credit's senior debt to BB-plus from BBB-plus and preferred stock to B-plus from BBB.

"The downgrade centers around the continuing losses at Westinghouse Credit," Duff & Phelps said in its release. "This, in turn, has implications on the credit company's ability to maintain its short-term funding...and places a significant burden on the parent, Westinghouse Electric."

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