Telecom today said it had repurchased the remaining half of $300 million of convertible notes Microsoft bought in May 2001.
The notes were purchased when Telecom and Micosoft announced a partnership that united their internet portals in New Zealand -- Xtra and MSN. The issue of the seven-year notes was touted at the time as Microsoft investing in Telecom.
Half of the notes were repurchased in November.
NZPA understands the strike price to make it worthwhile for Microsoft to convert the notes was above $8 per share compared with the current price of $6.34.
In May 2001, when the deal was announced, Telecom shares were trading around $6.10 while the New Zealand dollar was trading at US42c compared with US70.3c at present.
Microsoft has been pulling back recently from corporate investments as a strategy to reduce risk.
Telecom said it had taken the opportunity to reduce short-term debt.
Chief financial officer Marko Bogoievski said the repurchase would allow Telecom to extend the average life of its debt liabilities.
He said the notes would be cancelled on February 15. The repurchase would have no effect on other existing agreements between Microsoft and Telecom, he added.
- NZPA
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