Time Warner Inc. (TWX), the diversified media conglomerate, recently announced the sale of debt through notes and debentures. The new $1 billion debt is divided into senior notes due January 2022 and senior debentures due October 2041.
The issue, with a guarantee of Historic TW Inc., is of $500 million senior debts at 4% with a price of 98.297% of their face value, carrying a due date of 2022 and of $500 million 5.375% debentures at a price of 99.366% of their face value with a due date of 2041.
Further, the obligation of Historic TW Inc. is guaranteed by HBO, Inc. and Turner Broadcasting System, Inc.
The announcement reflected the company’s strategic approach to utilize the amount from the offering for common business purposes while boosting the shareholders’ return through share repurchases and business expansion.
The offering is expected to close on October 17, 2011.
Earlier in April, the company issued $1 billion senior debts at 4.75% with a price of 98.943% of their face value, carrying a due date of 2021 and of $1.0 billion 6.25% debentures at a price of 98.707% of their face value with a due date of 2041.
Time Warner’s significant international presence has helped to broaden its client base and product portfolio. The company operates in the United Kingdom, Germany, Canada, France, Japan and other countries apart from the United States. We believe that its strong international exposure will boost growth in the coming quarters.
The company derives substantial revenue from advertising, which in turn, depends upon the health of the economy. During recession, it has been seen that the demand for advertising dropped. Publishing companies have been grappling with the slump in print advertising demand, with advertisers migrating to the Internet driven by increasing online readership and lower ad prices online than print
Currently, we have a long-term Neutral rating on the stock. Moreover, Time Warner competes with News Corporation (NWSA) and Walt Disney Company (DIS), and has a Zacks #3 Rank, which translates into a short-term Hold rating.
