Time Warner raises $3 billion


The bond market still appears to be open for media companies. Time Warner Inc. announced that it had sold three new issues of $1 billion each. The proceeds will be used to retire some existing debt and for general corporate purposes.

The first piece was a $1 billion underwritten public offering of 3.15% senior notes due 2015 at a price equal to 99.881% of their face amount.

Second was a $1 billion underwritten public offering of 4.70% senior notes due 2021 at a price equal to 99.762% of their face amount.

And finally TW priced a $1 billion underwritten public offering of 6.10% debentures due 2040 at a price equal to 99.931% of their face amount.

The sale of the notes and debentures is expected to close on July 14, 2010.

The notes and debentures will be issued by Time Warner and guaranteed by Historic TW Inc. In addition, Home Box Office Inc. and Turner Broadcasting System Inc. will guarantee the obligations of Historic TW Inc. under its guarantee.

Moody’s Investors Service had assigned a Baa2 rating to Time Warner’s new senior unsecured notes and debentures of benchmark size due 2015, 2021 and 2040.

Moody’s noted that it anticipates that the company will use proceeds from the debt offering to repay, repurchase or redeem outstanding indebtedness and for general corporate purposes. The company announced that it has commenced a tender offer to purchase for cash any and all of the outstanding 5.50% Notes due 2011 of Time Warner, 6.875% Notes due 2012 of Time Warner and 9-1/8% Debentures due 2013 of Historic TW Inc., the ratings agency noted.

“As a result, we expect the transaction will be essentially leverage neutral and will have minimal impact on Time Warner’s total outstanding debt and debt-to-EBITDA leverage ratio. In Moody’s opinion, the offering will enhance the company’s debt maturity profile and positively impact Time Warner’s already-strong intermediate-term liquidity position. Time Warner’s rating outlook is stable,” Moody’s said.

RBR-TVBR observation: With interest rates remaining so low, investors are snapping up corporate debt offerings. So far, media companies have done very well this year in getting new offerings funded.