New Issue: AT&T $844 mln exchangeables into Cablevision at 6.5% yield, up 22%

By Ronda Fears

Nashville, Tenn., Oct. 18 - AT&T Corp. sold an upsized $843.8 million of three-year mandatory convertible notes to yield 6.5% with a 22% initial conversion premium. The registered deal, via lead manager Bear Stearns & Co., sold at the aggressive end of price talk, which had put the yield between 6.5% and 7.0% and the premium at 18% to 22%. AT&T also sold 19.15 million shares of Cablevision stock for $690 million, downsized from $750 million.

"It was a blowout,"a sell-side source familiar with the deal said.

Originally, AT&T planned to split the common stock and convertible offerings evenly, but due to so much demand for the mandatory convertible, the source said, the split was amended to 55% for the convertible and 45% for the stock sale. Including the respective greenshoes, AT&T essentially liquidated its stake in Cablevision by virtue of the offerings. There is a $104.5 million greenshoe available on the stock offering.

Terms of the new deal are:

Issuer: AT&T Corp

Amount: $843.8 million

Greenshoe: $126 million

Lead Manager: Bear Stearns

Maturity Date: Nov. 15, 2004

Coupon: 6.5%

Issue Price: par

Yield-to-maturity: 6.5%

Conversion Premium: 22%

Conversion Price: $36.05 to $43.98

Conversion Ratio: 1.0 to 0.8197

Call: non-callable

Settlement Date: Oct. 23

End

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