Time Warner Inc
), the diversified media conglomerate, recently announced the sale
of $1 billion debt through notes and debentures. The new debt is
divided into two parts -senior notes due 2022 and senior debentures
The issue, with a guarantee of Historic TW Inc., is of $500
million senior debts at 3.4% with a price of 99.857% of their face
value, carrying a due date of 2022 and of $500 million senior debts
at 4.9% debentures at a price of 98.929% of their face value with a
due date of 2042.
Further, the obligation of Historic TW Inc. is guaranteed by
Home Box Office Inc. and Turner Broadcasting System Inc. The
offering is expected to close on June 13, 2012.
The announcement reflects the company's strategic approach to
utilize the amount from the offering for common business purposes
while boosting shareholders' return through share repurchases and
Borrowing costs have gone down significantly, marking a record
low, and in turn, facilitating companies to obtain easy financing
at compelling prices. Besides, corporate bonds are in high demand
as U.S. treasuries are yielding low rates, driving investors toward
the bonds issued by sound companies.
Earlier in October 2011, the company had issued $500 million
senior debts at 4% with a price of 98.297% of their face value,
carrying a due date of 2022 and $500 million senior debts at 5.375%
debentures with a price of 99.366% of their face value and a due
date of 2041.
Time Warner's significant international presence has helped
broaden its client base and product portfolio. The company operates
in the UK, Germany, Canada, France, Japan and other countries apart
from the U.S. We believe that the company's strong international
exposure will boost its growth in the coming quarters.
Currently, we have a long-term 'Neutral' rating on the stock.
Moreover, Time Warner competes with
Walt Disney Company
), and has a Zacks #3 Rank, which translates into a short-term
DISNEY WALT (DIS): Free Stock Analysis Report
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TIME WARNER INC (TWX): Free Stock Analysis
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