New Issue: AT&T upsized $191.57 million exchangeables, into Rainbow Media, at 6.25% yield, up 22%

By Ronda Fears

Nashville, Tenn., Dec. 13 - AT&T Corp. sold an upsized $191.57 million of three-year mandatory exchangeables that convert into Rainbow Media Group shares at par of 22.5 to yield 6.25% with a 22% initial conversion premium. Banc of America Securities and Salomon Smith Barney were joint book-running lead managers of the registered deal, which was upsized from $185 million. The convert priced cheaper than price talk that put the yield between 6.5% and 7.0% yield but at the rich end of premium guidance in a range of 18% to 22%. The deal was upsized from $185 million.

AT&T also sold 12.675 million shares of Rainbow Media, the tracking stock for the non-New York assets of Cablevision, fetching another $3 billion in proceeds. Bear Stearns & Co. and Merrill Lynch & Co. were joint book-running lead mangers of the stock offering, with Banc of America and Salomon Smith Barney as joint lead managers. AT&T will hold 11.7 million Rainbow Media shares, or 16.2% after the deals.

Terms of the new deal are:

Issuer: AT&T Corp.

Amount: $191.57 million

Greenshoe: $28.74 million

Lead Managers: Banc of America Securities and Salomon Smith Barney

Co-Managers: Bear Stearns and Merrill Lynch

Maturity Date: Jan. 15, 2005

Dividend: 6.25%

Issue Price: par, $22.50

Yield-to-maturity: 6.25%

Conversion Premium: 22%

Conversion Price: $22.50/$27.45

Conversion Ratio: 0.81967/1.00

Call: non-callable

Settlement Date: Dec. 18

End

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