Disney sells debt to buy back stock, others may too
(UPDATE: Adds details, comments, closing prices)

By Jonathan Stempel

NEW YORK, Sept 17 (Reuters) - In an unusual alliance of Wall Street and corporate America, media giant Walt Disney Co. (NYSE:DIS - news) on Monday sold $1 billion of debt to Goldman Sachs Group Inc.(NYSE:GS - news), people familiar with the sale said.


The Burbank, California-based company, whose corporate bond sale was the first by a U.S. company since Tuesday's attacks on the World Trade Center and the Pentagon, said it sold the bonds in part to help it buy back some of its stock, which it said it was doing on Monday.

Disney is one of more than 75 U.S. companies, including conglomerate General Electric Co.(NYSE:GE - news), food and beverage company PepsiCo Inc. (NYSE:PEP - news) and drugmaker Pfizer Inc. (NYSE:PFE - news), to announce buyback programs on Monday to shore up confidence in the U.S. stock markets and economy. The Securities and Exchange Commission last week eased its rules on buybacks.

Disney is the first company, though, to say since the attacks that it conducted a bond sale specifically to buy back stock. Others could follow.

``Just about any of the major companies that frequently issue bonds can come into the market,'' said John Woolway, who helps invest more than $1 billion for First Investment Group in Omaha, Nebraska. ``People are going to be looking for safety, and a name like General Electric, for example, would probably be very well received.''

Disney sold $500 million each of 3.9 percent two-year notes yielding 1 percentage point more than Treasuries, and 4.5 percent three-year notes yielding 1.05 percentage points more than Treasuries.

The company, which has a stock buyback program authorizing it to buy back up to 385 million shares, said it will also use proceeds to make purchases, including the acquisition of the Fox Family Channel Worldwide Inc. from Rupert Murdoch's News Corp. Ltd. (NYSE:FOX - news) (NYSE:NWS - news) (Australia:NCP.AX - news).

``We decided it was the right thing to do to be in the market,'' said Chief Financial Officer Thomas Staggs. ``We wanted to help show the depth and resiliency of the market.''

Disney shares closed Monday on the New York Stock Exchange at $19.25, down $4.33, or 18.4 percent. They have lost one-third of their value this year.

HIGH QUALITY

Goldman Sachs was not available to discuss why it bought the bonds. It is more common for investment banks to buy an entire bond issue -- sometimes known as a ``bought deal'' -- in the junk or convertible bond market, where underwriting fees are higher and can cushion market volatility.

Woolway said that although a large number of companies is waiting to sell bonds, having postponed sales last week, Goldman should find a ready market for Disney's bonds.

``Once the market gets through the point at which it feels comfortable with prices on secondary issues, companies with well-known names can sell,'' he said. ``There's a fair amount of money out there ready to invest in deals such as Disney.''

One negative, though, could be that companies' credit ratings, which have been sliding for more than three years, could fall further, boosting borrowing costs, because they add debt and reduce the amount of outstanding stock.

``This will increase debt leverage on their balance sheets in the face of a potentially slowing economy,'' said Mitch Stapley, chief fixed-income officer at Fifth Third Investment Advisors in Grand Rapids, Michigan.

Moody's Investors Service rates Disney's senior unsecured debt ``A2,'' its sixth-highest investment grade. Standard & Poor's rates it a roughly equivalent ``A.'' Moody's is reviewing its rating for a possible downgrade, while S&P's rating outlook is negative.

(Additional reporting by Nancy Leinfuss in New York and Bob Tourtellotte in Los Angeles.)

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Flurry of Companies Buy Back Shares

NEW YORK (AP) - Dozens of companies announced plans Monday to buy back their shares, under recently loosened Securities and Exchange Commission (news - web sites) rules aimed at steadying the markets after last week's terrorist attacks.

The SEC used its emergency powers for the first time Friday, waiving regulations to encourage buying for the reopening of stock markets Monday after an extraordinary four-session shutdown. The waivers, in effect for up to 10 days, allow buybacks without customary restrictions regarding the volume of shares and timing of purchases.

The companies quickly took advantage, announcing buybacks to help counter any panicked sell-offs and prop their share price.

Despite the moves, stocks opened to a wave of selling, sending the Dow Jones industrials down more than 720 points and below 9,000 for the first time in 21/2 years. The Dow ended down 685 points, or 7.1 percent, at 8,921.

PepsiCo Inc., based in Purchase, N.Y., said it planned to repurchase up to $2 billion worth of its common stock. In December, it had rescinded repurchase plans so that it could qualify its planned merger with The Quaker Oats Co. for pooling-of-interests accounting treatment.

But the SEC's emergency order now allows PepsiCo to repurchase shares for five days following Monday's reopening.

``We remain very confident in PepsiCo's growth prospects and the stability of the marketplace. We welcome the opportunity to support that stability by buying back shares in a disciplined fashion,'' said PepsiCo chairman and chief executive Steve Reinemund.

FleetBoston Financial, the nation's seventh-largest financial holding company, said it would buy back up to $4 billion of the company's stock, saying it has confidence in the markets.

``Our conviction about the long-term value of our franchise is matched only by our confidence in the enduring strength of the financial industry and markets,'' said Terrence Murray, chairman and chief executive officer of FleetBoston.

Under the looser restrictions, companies may now buy back their own stock in the first and last 30 minutes of the trading session, activity that ordinarily is banned to avoid market manipulation.

Companies also may increase daily purchases of their stock to 100 percent of the previous month's daily average volume, up from 25 percent. And company officers and directors may buy stock no matter when they last traded - previously, these insiders had to return the profits if they traded more frequently than every six months.

General Electric, based in Fairfield, Conn., said it would accelerate its current repurchase program, about $2.8 billion. It is part of a $22 billion repurchase program authorized by the company's board in December 1994.

Chipmaker Intel Corp. said it increased by 300 million the number of shares available under its ongoing repurchase program, or about $720 million. About 63 million shares remained available under the previous authorization at the end of the second quarter.

Other companies announcing major buybacks:

- Cisco Systems Inc., up to $3 billion.

- United Parcel Service, up to $1.3 billion.

- Morgan Stanley, up to $1 billion.

- Compaq Computer Corp., up to $550 million.

- Cardinal Health, up to $500 million.

- Bank One Corp., up to $500 million.

- Allstate Corp., up to $500 million.

- Siebel Systems Inc., up to $500 million.

- Solectron Corp., up to $200 million.

- Barr Laboratories Inc., up to $100 million.

- Starbucks Corp., up to $60 million.

PepsiCo and Cardinal Health, a health care products company, were among the few companies managing to keep their shares on the plus side. PepsiCo stock rose $1 to $47.90 in late trading on the New York Stock Exchange (news - web sites); Cardinal Health edged up $1 to $71. Most of the other companies' shares were off between 2 percent and 15 percent


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Wohin führen die Aktienrückkäufe langfristig? Die US-Unternehmen sind ohnehin so hoch verschuldet wie nie zuvor. Die Verschuldung wird zunehmen. Um alle Schuldner zu retten später einmal Währungsreform, Superinflation?
Wenn die überbewerteten Aktien ohnehin frühestens 2010 weiter steigen können, werden die hoch verschuldeten Unternehmen bis dahin gelähmt sein. Die Zinsen müssen ja unten bleiben. USA sind ab jetzt definitiv in der gleichen Rolle wie Japan 1990. Oder mache ich einen Denkfehler?
Gruß
El Sheik

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