Time Warner Cable Inc. (NYSE: TWC) has filed a shelf registration with the Securities and Exchange Commission and has commenced an underwritten public offering of debt securities with maturities ranging from 5 to 30 years. Unfortunately, the size was not listed in the S-3 filing this morning.
The net proceeds from the issuance of the debt securities are expected to be used to finance a one-time dividend to stockholders of Time Warner Cable to be paid just prior to the previously announced spin-off of Time Warner Cable from its parent company Time Warner Inc. (NYSE: TWX).
What is interesting is that this leaves an out in case market conditions or other conditions would keep that spin-off from happening. If the separation is not consummated and the special dividend is not paid, Time Warner Cable says it will use the proceeds for general corporate purposes. Those general purposes are the traditional terminology that is cookie cutter vernacular: additions to working capital, capital expenditures, repayment of debt, the financing of possible acquisitions and investments or stock repurchases.
Time Warner Cable Inc. is the issuer and these debt instruments that are to be guaranteed by its subsidiaries TW NY Cable Holding Inc. and Time Warner Entertainment Company, L.P.
While the size was not listed, this is likely going to be a very large underwriting if you see how many underwriters there are for a mere debt offering. Banc of America Securities, BNP Paribas Securities, Greenwich Capital Markets, Morgan Stanley, and Wachovia Capital Markets, LLC are the listed underwriters for this debt offering.
I can't say I had much personal experience with Adelphia, which was the fifth largest cable company in the country when it filed for bankruptcy in 2002. But I did follow the case of the Rigas' family with interest. Dad and founder John and son Timothy Rigas ended up going to jail after treating this huge public company like their own personal candy store.
Founded in 1952 in Coudersport, Penn., Adelphia's name came from the Greek word for brother. The company went public in 1986 and grew by acquisition -- buying up smaller cable providers.
The company went bankrupt in 2002 after disclosing $2.3 billion in debt that was kept off the balance sheet. Federal prosecutors charged the Rigases and other officers of looting the company of an estimated $100 million, much of it spent on ridiculous excess -- like spending $6,000 to have Christmas trees flown in to New York.
Both Rigas men were found guilty and in 2007 started serving time in a Federal prison in Raleigh, North Carolina.
Time Warner Cable (NYSE: TWC) and Comcast (NASDAQ: CMCSA) bought up Adelphia's cable business in 2006, splitting up the customers by region.
Let us know in the comments what you miss about Adelphia. And be sure to check out other Companies That Have Vanished.
Depending on who is doing the measuring, The Weather Channel is one of the most widely watched 24-hour cable networks. Weather.com is among the top 15 or 20 most visited websites in the U.S. Since there are very few media properties of this size on the block, they are especially valuable.
Landmark, the owner of The Weather Channel, has put it on the block. It wanted $5 billion. The rumors are that it will get $3.5 billion on a good day. The last two companies kicking the tires were Time Warner (NYSE: TWX) and NBC Universal. TWX has apparently dropped out.
Although the media conglomerate has over $9 billion in money coming in as it finishes its spin-off of Time Warner Cable (NYSE: TWC), management cannot afford to be viewed as overanxious. Paying too much for a large asset would not make the new era of shareholder value under recently appointed CEO Jeff Bewkes look like it is off to a terribly good start.
According to The Wall Street Journal (subscription required), "Time Warner withdrew after Landmark told the media company it needed more time to make a decision." That probably means the seller is holding out for more cash.
For Time Warner, it is a shame. Its cable networks, CNN and Turner, do particularly well. Putting The Weather Channel with them would have built that business. Online, TWX has big properties like AOL and CNN.com, making Weather.com a good marriage.
It all made sense, except the price.
Douglas A. McIntyre is an editor at 247wallst.com.
For every person who had to wait forever for Time Warner Cable, Inc. (NYSE: TWC) to pick up the phone, for every customer who had to slog through an automated voice menu, then stew waiting to talk to a person, for every family that went days without TV or internet, Los Angeles City Attorney Rocky Delgadillo struck a blow Friday. On behalf of the city of Los Angeles, Delgadillo sued the top cable provider for southern California, saying its service was so bad it constituted fraud and deceptive advertising.
The city wants $2,500 for each instance, double if the victim was old or disabled. Part of the problem in Los Angeles stemmed from the company's complicated task of absorbing Comcast and Adelphia customers, not everyday business. Consumers had filed their own civil suit a while back.
Time Warner Cable stock dropped $1.23, or about 4%, Friday on somewhat heavy trading. The damages could add up to potentially millions of dollars. Or it could be one of those lame settlements that give customers useless coupons.
The direct impact of the civil suit isn't as much of a big deal -- yet -- as the broader implications. What if other cities or customers sue? How is this suit going to influence the opinion of someone who's deciding between Time Warner and Dish Network or DirecTV? Between Roadrunner and wireless broadband? For a long time, cable providers could offer lousy service because there was basically no competition. Now, they have to behave better or lose customers. Now that could be real money.
The notes out of the Fed gave no indication of rate cuts. Too much worry about inflation.
After a report showing that supplies have dropped, oil traded north of $132.00 per barrel today. Maybe T. Boone Pickens' call for $150 oil was intended to be by the end of the month rather than the end of the year. The minutes from the last FOMC meeting may say it all: increased inflation expectations, increased unemployment expectations, lowered GDP expectations. But no recession, at least not officially while the Fed describes the environment of stagflation. Below are the unofficial closing US index levels:
AMR Corp. (NYSE: AMR) saw shares fall a sharp 25% after the company announced at its annual shareholder meeting that it was going to slash 11% or 12% from its flight capacity. To make bad matters worse, Soleil issued an untimely downgrade of the sector today.
Time Warner exchanges its 12.4% interest in TW NY Cable Holding Inc., a subsidiary of Time Warner Cable, for 80 million newly issued shares of Time Warner Cable's Class A common stock, increasing Time Warner's ownership stake in Time Warner Cable's common stock from 84% to 85.2%;
Time Warner Cable declares a one-time dividend of $10.27 per share for a total of about $10.9 billion payable immediately prior to completion of the separation;
Time Warner receives $9.25 billion from this dividend;
Time Warner Cable expects to fund the one-time dividend through its existing revolving credit facility and $9 billion from a new, committed two-year bridge term financing from a syndicate of banks;
Time Warner converts its Time Warner Cable Class B common shares (each Class B common share has the voting power equivalent to 10 Class A common shares) into Time Warner Cable common shares on a one-for-one basis in a recapitalization that results in Time Warner Cable having one class of common stock;
Time Warner will distribute its entire ownership stake in Time Warner Cable to Time Warner stockholders in a tax-efficient manner; the exact form of the distribution will be determined shortly before the closing of the transaction, based on market conditions.
This should be the start of that value unlock, and this will also clarify the balance sheets of both companies.
In a recent newsletter article, I generated an $18 scenario with a $20 target on a slightly enhanced basis. In early to mid 2009 as the economic slowdown should have been worked through, I even see a $22 to $24 upside scenario. Jon Ogg is the editor of 24/7 Wall St.'s Special Situation newsletter.
Time Warner (NYSE: TWX) declared a one-time dividend of $10.9 billion to its stockholders, payable just prior to separation of Time Warner Cable (NYSE: TWC); TWX will receive $9.25 billion of Time Warner Cable's dividend.
TWX overall option implied volatility of 29 is below its 26-week average of 32 according to Track Data, suggesting decreasing price risk.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Stock futures were somewhat lower early Wednesday morning as as oil prices managed to set yet another record high, going through yet another milestone and move above $130 a barrel.
U.S. stocks plunged Tuesday, after a Labor Department report showed wholesale inflation in April rose more than forecast and as the price of oil continued to rise following a prediction from T. Boone Pickens of $150 oil. The Dow industrials fell 199 points, the S&P 500 dropped 13 points and the Nasdaq Composite dropped 23 points.
At 10:30 a.m. today, weekly crude inventories data will be released. In the meanwhile, Light, sweet crude for July delivery reached a trading record of $130.47 a barrel. It has been supply concern, rather than a lower dollar, that has been moving oil lately.
Also today, the minutes of the latest Federal Reserve meeting will be released at 2:00 pm EDT. No doubt investors will scrutinize the minutes, searching for more clues on the Fed's next step, which would hope help strengthen the dollar somewhat.
The New York Times Bits blog says that according to several label executives, Apple Inc. (NASDAQ: AAPL) has approached some of the major music labels to try to expand the variety of ringtones and other musical features for the iPhone. The negotiations are very active right now and a final deal has not been set, but will likely be during the summer, but after June 9. Ringtones are quite a profitable market, and Apple wanting to have ringtones from major label makes total sense. Apple also wants to offer Answer Tones for the iPhone.
Intel Corp (NASDAQ: INTC) said Monday its venture capital arm has invested 50 million ringgit ($16 million) in Malaysia's Green Packet Berhad to help develop the country's first nationwide high-speed WiMAX network. Already earlier this month, Intel Capital along with Google Inc (NASDAQ: GOOG), Comcast Corp (NASDAQ: CMCSA), Time Warner Cable Inc (NYSE: TWC), and Bright House Networks agreed to invest $3.2 billion into a new company to speed up deployment of the next-generation mobile WiMAX network. But that's not all. Intel Capital also expects to close half a dozen deals in India this year, its regional head said on Monday.
Warren Buffett is apparently on the prowl for another acquisition. The Oracle of Omaha has begun his European tour Monday, looking for possible acquisitions for his Berkshire Hathaway Inc. (NYSE: BRK.A).
As soon as Richard Parsons gave up his CEO role in January, remaining chairman of Time Warner Inc. (NYSE: TWX), the smart money bet that his tenure would be short-lived. After all, he had turned over the fun part of the job to Jeffrey Bewkes.
Today, at the annual shareholder meeting, Parsons said he would likely give up his role as chairman after this year. This will mean Bewkes gets the chairman title affixed to his CEO tag. In fact, his contract stipulates being able to become chairman.
This is more than a title change. It will consolidate the decision-making power and the public's perception of who is in charge with Bewkes. It may even allow Bewkes to more expeditiously get Time Warner Cable Inc. (NYSE: TWC) out of the structure.
For Parsons, it will mean a fresh start. He has long been thought of as a candidate for Mayor in New York City. Handing the chairmanship of Time Warner over to Bewkes would allow Parsons to pursue that.
According to people familiar with the matter, Robert Verrone, one of the most zealous commercial real-estate lenders during the industry's boom, will leave Wachovia Corporation (NYSE: WB) within the next week, the Wall Street Journal reported.
WEB SITES:
Bloomberg reported that the Department of Justice is probing whether UBS AG (NYSE: UBS) helped clients evade American taxes. In an e-mailed statement, the firm said one senior bank employee was "briefly detained" by authorities.
Bloomberg also reported that Vallejo, California's city council voted to go into bankruptcy. Officials said that after talks with labor unions failed to win salary concessions from police and fire fighters, the city does not have enough money to pay its bills.
According to a rumor, TechCrunch reported that the Yahoo Inc (NASDAQ: YHOO) board of directors yesterday authorized Yahoo chairman Roy Bostock, rather than CEO Jerry Yang, to call Microsoft Corporation (NASDAQ: MSFT) CEO Steve Ballmer about re-starting negotiations.
U.S. stock futures were lower early Wednesday as investors, worried about inflation, await data on pending home sales and labor costs. Earnings news in focus this morning comes from tech bellwether Cisco Systems, which gave a cautious outlook, and from Walt Disney, which reported good results.
Despite starting the day on a down note, as oil futures remained high, U.S. stocks closed higher on Tuesday, mostly due to some reassuring comments made on a Fannie Mae (NYSE: FNM) conference call. The Dow industrials ended up 51 points, or 0.40%, the S&P 500 rose 10 points, or 0.77%, and the Nasdaq Composite finished 19 points, or 0.78%, higher.
Today investors will finally have some data to sink in their teeth. First quarter labor productivity and unit costs is out at 8:30 a.m. EDT. Economists expect productivity to rise 1.5% in the first quarter, but for unit labor costs to climb as well.
Also on the docket today are March pending home sales data to be released at 10:00 a.m. and which probably fell another 1%.
After that, weekly crude inventories are scheduled to be reported. Crude futures have held up near $122 a barrel despite the dollar advancing against the yen and the euro.
First, shares rose this morning as investors gave a thumbs up to Chief Executive Jeff Bewkes' plan to dispose of the media conglomerate's cable television business. Then, they fell after the earnings conference call. Perhaps investors were expecting news on a deal for AOL. Otherwise, the parent of CNN, Time magazine and Warner Brothers posted mediocre quarterly results (pdf).
"We've decided that a complete structural separation of Time Warner Cable Inc. (NYSE: TWC), under the right circumstances, is in the best interests of both companies' shareholders, Bewkes said in the earnings release. "We're working hard on an agreement with Time Warner Cable, which we expect to finalize soon."
This has been a busy morning for Time Warner Inc. (NYSE: TWX). The company announced earnings and also unveiled a plan for the divestiture of Time Warner Cable Inc. (NYSE: TWC).
First, Time Warner posted earnings (click here for the pdf file) of $0.22 EPS on revenues of $11.42 billion; First Call had estimates at $0.23 EPS and $11.39 billion in revenues. The company also reaffirmed (pdf) the 2008 guidance of $1.07 to $1.11 EPS (First Call is $1.09), and it sees 7% to 9% growth in OIBDA from the $12.9 billion base in 2007. As a result of a tax benefit, the company also sees 2008 cash flow at or above $4.5 billion.
Time Warner Cable beat estimates (pdf) in its first quarter report, with $0.24 EPS from operations and an 8% revenue rise to $4.16 billion; First Call had estimates of $0.22 EPS on $4.14 billion in revenues. Time Warner Cable also reaffirmed its guidance (pdf) for fiscal 2008, projecting a revenue growth rate of 9%, to $17.25 billion, and EPS between $1.25 to $1.30. First Call estimates are $1.27 EPS and $17.25 billion in revenues.
Now for the fun part, from the department of "Thank Heavens!" -- Time Warner Cable is going to be split off from Time Warner Inc. While the detailed spin-off plan wasn't available, the goal here looks to be a complete separation. CEO Jeff Bewkes noted that the companies expect to finalize an agreement soon. Based on roughly an 84% stake and a current market cap of $27.3 billion, the structure could be the most important part of this divestiture. This could amount to a difference of almost $23 billion for the parent, and it will also bring about some serious de-leveraging of the books as much of the debt belongs to the cable operations.
So far there is an inversion in share reaction, with Time Warner shares down 1% and Cable shares up 1%.
This post is part of a series on some of the most memorable 
Depending on who is doing the measuring, The Weather Channel is one of the most widely watched 24-hour cable networks. Weather.com is among the top 15 or 20 most visited websites in the U.S. Since there are very few media properties of this size on the block, they are especially valuable.
Time Warner
Stock futures were somewhat lower early Wednesday morning as as oil prices managed to set yet another record high, going through yet another milestone and move above $130 a barrel.
As soon as Richard Parsons gave up his CEO role in January, remaining chairman of .gif){kind=logo}
Here are some highlights from this past week's 
Investors don't know what to make of 
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Wal-Mart's launch of $20 slimming jeans will be a huge success
Why I spent some of my stimulus check on GE
