Time Warner Cable points to debt cut, aims to stay high-grade rated

By Andrea Heisinger

New York, July 29 - Time Warner Cable Inc. drew attention to its ability to pay down debt in its second-quarter earnings report Wednesday while pledging to maintain its investment-grade ratings.

"We generated over $1 billion of free cash flow in the first half of the year, which has enabled us to reduce the debt we incurred in our recent separation from Time Warner Inc., strengthening our balance sheet and driving returns for our shareholders," said chief executive officer Glenn Britt in the company's earnings release.

Net debt was $22.4 billion as of June 30, according to the release. This compares to the $12.6 billion in net debt as of Dec. 31, 2008, with the higher amount due to net borrowings to fund the company's special cash dividend payment in March, made as part of its spin off from Time Warner.

In response to a question about the company's debt during the earnings conference call, Rob Marcus, senior executive vice president and chief financial officer, stressed that keeping the company's financial strength is the number one goal.

"We've been saying our first priority since announcing our separation [from Time Warner] is maintaining an investment-grade rating, and it continues to be," he said.

As for the outlook for the remainder of the year, he added: "It's too early to be talking about other uses of free cash flow."

Britt said during the call that the company's revenue was up 4% for the quarter, with a net total of $4.5 billion.

"I'm pleased with our second-quarter financial results and, in particular, with our very strong free cash flow," Britt said in the press release.

Since the company announced its separation from Time Warner in May 2008, Time Warner Cable has done $11.5 billion in debt offerings. The most recent was a $1.5 billion sale of 30-year notes on June 24.

The company has no debt maturing until February 2011, said Marcus.

"In aggregate, we've addressed our short-term financing requirements," he said.

During the quarter, the company did interest rate swaps to maintain an appropriate level of floating-rate debt, he said.

The company had $4.4 billion of unused liquidity at the end of the quarter.

Time Warner Cable is a New York-based cable operator.

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