Capital Markets

Time Warner Cable Amasses Dividend Dough

$10.9 million will go to shareholders before the company is spun off from Time Warner Inc., which as 84 percent owner will get most of the special ...
Stephen TaubJuly 2, 2008

Time Warner Cable has entered into an agreement with a group of global banks for a $9 billion term loan facility. The nation’s second largest cable company said it plans to use the proceeds in part to distribute a special cash dividend before its spinoff from Time Warner Inc., which is expected to be completed in the fourth quarter.

The company last month issued $5 billion in senior unsecured notes and debentures, which is intended to be used for the special dividend as well.

Time Warner Cable in May announced plans to offer the special dividend, which it said would total $10.9 billion. Most of it will go to Time Warner, which owns 84 percent of the cable company. After the dividend is paid, Time Warner will distribute its stake to Time Warner Cable shareholders.

Meanwhile, on Wednesday Time Warner Cable CFO Robert Marcus told Bloomberg the company may consider a stock buyback or dividend after reducing debt taken on with the spinoff.

Marcus told the wire service he plans to reduce the ratio of debt to earnings before interest, tax, and non-cash costs to about 3.25 from as much as 3.8 after the split. After that, the company may make a payout to stockholders, he said.

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