Telecom buys back rest of Microsoft notes

Telecom has repurchased the remaining half of $300 million of convertible notes Microsoft bought in May 2001. The notes were bought when Telecom and Microsoft announced a partnership that united their internet portals in New Zealand - Xtra and MSN. The seven-year notes' issue was touted at the time as Microsoft investing in Telecom. Half were repurchased in November.

It is understood the strike price to make it worthwhile for Microsoft to convert the notes was above $8 a share compared with the present price of $6.34. In May 2001, when the deal was announced, Telecom shares were trading around $6.10 and the local dollar was trading at 42USc, compared with 70.3USc at present.

Recently, Microsoft has been pulling back from corporate investments as a strategy to reduce risk.

Chief financial officer Marko Bogoievski said the repurchase would allow Telecom to extend the average life of its debt liabilities. The notes would be cancelled on February 15.

- NZPA