Time Warner noteholders consent to amendment needed to spin off or sell AOL

By Angela McDaniels

Tacoma, Wash., April 16 - Time Warner Inc. said it successfully completed its consent solicitation to amend the indentures governing $12.33 billion outstanding principal amount of debt securities.

The amendment will allow AOL LLC to convey or transfer its properties and assets. Time Warner is exploring strategic options for AOL that include the spinoff, sale or merger of its web services business, access services business or both.

Time Warner offered a consent fee of $5 for each $1,000 principal amount of notes and a guarantee by Home Box Office, Inc.

The HBO guarantee will be issued only in connection with a disposition by AOL of its properties and assets substantially as an entirety, according to an 8-K filing with the Securities and Exchange Commission.

The consent solicitation began April 6 and expired at 5 p.m. ET on April 15.

The company solicited consents from the holders of the following securities:

• $1 billion 6.75% notes due 2011;

• $2 billion 6.875% notes due 2012;

• $2 billion 7.625% debentures due 2031;

• $2 billion 7.7% debentures due 2032;

• $300 million 8.375% senior notes due 2013;

• $1 billion 9.125% debentures due 2013;

• $150 million 8.05% debentures due 2016;

• $500 million 7.25% debentures due 2017;

• $602.34 million 9.15% debentures due 2023;

• $450 million 7.57% debentures due 2024;

• $28.48 million 6.85% debentures due 2026;

• $500 million 6.95% debentures due 2028;

• $200 million 8.3% discount debentures due 2036;

• $600 million 6.875% debentures due 2018; and

• $1 billion 6.625% debentures due 2029.

The 6.75% notes, 6.875% notes, 7.625% debentures and 7.7% debentures were issued by Time Warner. The 8.375% notes were issued by Turner Broadcasting System, Inc., and the remaining notes were originally issued by Time Warner Cos., Inc.

For each series of securities, the company needed consents from holders of a majority of those notes in order to amend the indenture.

The solicitation agents were Banc of America Securities LLC (704 683-3215 for banks and brokers or 888 292-0070), Citi (800 558-3745) and Deutsche Bank Securities Inc. (212 250-2955 for banks and brokers or 866 627-0391). The information and tabulation agent was D.F. King & Co., Inc. (800 758-5880 or 212 269-5550).

Time Warner is a media and entertainment company based in New York.

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