It appears that Time Warner Inc. (NYSE: TWX) may actually be considering a sell-back of a small stake in Time Warner Cable (NYSE: TWC) according to an Associated Press report from last night.
This morning Reuters added some information. The board of directors of Time Warner Cable appointed a special committee to look into any proposal that Time Warner might make on its 12.43% stake. This stake was valued at roughly $2.9 billion back in 2005. If this occurs, it will be financed from the Cable company's revolving credit facility or by accessing debt. Time Warner would apparently still hold an 84% stake in the cable operator if the filing information is accurate.
But there is another thought here. It may be a bit Panglossian, but still worth a visit. Time Warner Inc. probably has a second wave of a restructuring in the not too distant future, or so I have speculated (actually, I believe it inevitable and as logical as Ireland being green). Shares of Time Warner Cable are down to $32.79, down from $43.25. The cable company should not take on the debt. The average daily trading volume is barely 1.2 million shares (about $40 million worth of stock trading per day). Its rival Comcast Corp. (NASDAQ: CMCSA) trades close to 20 million shares per day (over $400 million worth of stock).
The company could allow these to make the necessary conversions and it could be added to the free float on the exchange. While it is dilutive to existing shareholders, it would at least get that low float higher. Its $29.6 billion in market cap is far lower if you consider the free float in the stock.
If Time Warner (TWX) stakes are being sold, send them to Joe Q. Public
Posted Sep 20th 2007 1:14PM by Jon Ogg
Filed under: Time Warner (TWX), Comcast Cl'A' (CMCSA), Time Warner Cable (TWC)
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