Murdoch's $1bn-plus share issue to be delayed for a week

Rupert Murdoch's News America Holdings is to postpone its controversial $1bn-plus convertible share issue by at least a week, sources close to the company's bankers said yesterday.

Confirming reports in the weekend press, the sources said the issue, which will be convertible into shares of BSkyB, Mr Murdoch's 40 per cent- owned satellite broadcaster, would not be priced this week, in order to await the publication of BSkyB's quarterly profits at the company's annual meeting on Friday.

Under Stock Exchange rules, Mr Murdoch, who is a BSkyB board director, is unable to proceed with the share issue while BSkyB is in a close period.

It is understood that Merrill Lynch, the investment bank handling the share issue, had not considered the question of the quarterly profit announcement.

"Clearly, there has been a mistake made here," said one banking source.

But Merrill Lynch has insisted the share issue will go ahead. "There has been considerable interest from institutions, and we are definitely not considering pulling [the issue]," a source close to the bank said.

The share issue, which could raise as much as $2bn if there is sufficient investor interest, has hit BSkyB's share price hard in recent days, as the market questioned whether the timing suggested that Mr Murdoch believed the shares had risen to their medium-term high. The shares had been trading at nearly pounds 7, but had slid by the end of last week to just 593p. Regulatory worries over BSkyB's dominant market position in pay-television had also been to blame, media analysts said.

Under the terms of the issue, investors would pay a 20 per cent premium to BSkyB's share price for 30-year preference shares paying a coupon of about 5 per cent. They would be able to convert the shares into BSkyB stock after five years, although News America Holdings would have the right to pay cash equal to the then ruling BSkyB share price to avoid diluting Mr Murdoch's stake.

According to analysts, the terms of the issue represented a bet by Mr Murdoch that he would be able to pay cash in the event that shareholders move to convert their shares.