News Corp splits after Friday close

Friday, June 28th, 2013 | Finance News

NEW YORK (AP) — News Corp. formally split in two after the market closed on Friday, with existing shareholders getting one share in the new publishing entity for every four shares they hold in the media company.

Since Wednesday last week, preliminary shares of both sides of the company have been trading as if the split already occurred. Any buyers of preliminary shares will receive them next Friday.

Preliminary publishing shares closed Friday at $15.25.

The recent trading valued the publishing division, to be named News Corp., at around $8.8 billion. That's about 12 percent of the entire company's value. It had a market capitalization of about $75.5 billion before the split.

The movie and TV division is being renamed Twenty-First Century Fox Inc. Its preliminary stock closed at $28.99 on Friday.

Shares of both entities will begin trading normally on Monday, with new News Corp. shares trading under the tickers "NWSA" for non-voting Class A shares and "NWS" for voting Class B shares. Twenty-First Century Fox shares will trade under the tickers "FOXA" for non-voting Class A shares and "FOX" for voting Class B shares.

Rupert Murdoch, who will be chairman of both companies and CEO of Twenty-First Century Fox, will retain his grip on both companies by controlling nearly 40 percent of the voting stock in each.

The split completes a process that the company announced a year ago, and responds to investor concerns that the newspaper and book publishing divisions were dragging on the faster growing pay TV business.

By separating, the publishing division can devote resources toward engineering a turnaround, while the Fox side focuses on launching a national sports network to be called Fox Sports 1 that will compete with pay TV leader ESPN.

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Russian tycoon bids for control of Swiss steelmaker

Friday, June 28th, 2013 | Finance News

LUCERNE, Switzerland (Reuters) - Russian tycoon Viktor Vekselberg has launched a bid to control Swiss steelmaker Schmolz+Bickenbach after he failed to win support from shareholders to raise more capital and install his preferred candidate on the company's board.

On Friday, Vekselberg's investment vehicle, Renova, agreed to pay a group of long-time shareholders about 58 million Swiss francs for a 20.46 percent stake in the Swiss firm. The group, Schmolz+Bickenbach GmbH & Co KG (S+B KG), descendents of the company's founders, retains a similar stake.

The two parties, which have been allies in fighting for a restructuring at Schmolz+Bickenbach, then agreed to pool their shares, giving them a combined stake of 40.46 percent. This forces new stakeholder Vekselberg, under Swiss law, to make an offer to buy the remaining shares in Schmolz+Bickenbach.

In a statement, Renova's subsidiary, Venetos Holding AG, said it planned to make an offer around July 12 of 2.85 Swiss francs for each Schmolz+Bickenbach share. This offer is below the closing price of 2.90 francs on Friday.

The tender offer is worth 397 million Swiss francs for the remaining 60 percent of Schmolz+Bickenbach that Renova and S+B KG do not already own, Renova spokesman Rolf Schatzmann told Reuters.

However, Schatzmann said the offer is just a way of gaining control of the company to force a restructuring. He said Renova hopes existing shareholders will retain their shares rather than sell them.

Schmolz+Bickenbach's board and its founding family have been at odds over the future direction of the company, with the founders believing that the firm needs to raise more capital to secure its financial strength.

Vekselberg typically seeks to gain influence over the companies he invests in by building up a substantial minority stake, as he has done previously at Swiss machinery and equipment makers Sulzer and Oerlikon .

Earlier on Friday, Schmolz+Bickenbach shareholders backed a rights issue to raise $350 million, rebuffing calls from S+B KG which had allied with Vekselberg to seek a bigger capital increase of 430 million francs ($453 million).

Schmolz+Bickenbach will now offer shareholders seven new shares for two existing shares at a subscription price of 0.80 Swiss francs, a discount of 74 percent to Thursday's closing price. The new shares will begin trading on July 10.

The company said it would use the money to cut interest payments by repaying around $200 million in loans.

Like other European steelmakers, Schmolz+Bickenbach is struggling to find buyers for its steel because the euro zone's problems have flattened demand in the region, while slowing growth elsewhere has limited exports of goods such as cars.

The company, which has around 10,000 employees, had opposed the larger capital increase as an excessive burden for existing shareholders. ($1 = 0.9486 Swiss francs)

(Reporting by Albert Schmieder and Caroline Copley; Writing by Alice Baghdjian and Caroline Copley; Editing by Ruth Pitchford and Richard Chang)

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Fitch affirms U.S. AAA rating but outlook still negative

Friday, June 28th, 2013 | Finance News

By Daniel Bases

NEW YORK (Reuters) - Fitch Ratings on Friday affirmed the United States' top level credit rating at AAA but held the outlook at negative, citing still elevated debt levels that leave it vulnerable to shocks unless more deficit reduction measures are adopted.

The affirmation reflects strong economic and credit fundamentals, the firm said in a statement.

Fitch said it will conduct a further review of the credit rating by the end of 2013.

"The outlook remains negative due to continuing uncertainty over the prospect for additional deficit-reduction measures necessary to reduce government indebtedness over the medium to long term," Fitch said.

Fitch also said the negative outlook reflects "near-term risks associated with the expiration of federal appropriations authority at the end of the current fiscal year (30 September 2013) and in particular a timely increase in the debt limit."

On June 10, rival Standard & Poor's, which cut the U.S. credit rating to AA-plus from AAA in August 2011, revised its outlook on the credit to stable from negative, removing the near-term threat of a downgrade because of an improving economic and fiscal outlook.

Moody's Investors Service holds the U.S. rating at Aaa with a negative outlook, a position it has held since August 2011.

The firm highlighted the diversity of the U.S. economy, its "extraordinary monetary and exchange rate flexibility," global reserve currency status of the U.S. dollar as well as the depth and liquidity of its financial markets as underpinnings for the top credit rating.

"Fitch's current assessment is that the economic recovery is gaining traction as the headwinds from private sector debt deleveraging ease. This is underpinned by a pick-up in the housing market and gradual decline in unemployment," the firm said.

(Reporting by Daniel Bases and Pam Niimi; Editing by James Dalgleish)

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