Time Warner Cable files for IPO
EmptyNEW YORK -- Time Warner Inc.'s Time Warner Cable unit filed Wednesday for an initial public offering of $100 million in Class A common stock as shares of the world's largest media conglomerate set a 52-week high.
TW shares closed up 1.1% at $19.59 after going as high as $19.62 in intraday trading. The stock's previous 52-week high was $19.38.
In a filing with the U.S. Securities and Exchange Commission, TW Cable said it will list its stock on the New York Stock Exchange under ticker symbol "TWC." While company officials would not predict the timing of the IPO, citing a quiet period, Wall Street observers expect TWC shares to hit the market next year.
The filing also did not specify how many shares Adelphia will offer and at what price. Overall, the final size of the offering could be quite different from the $100 million initial target.
With cable shares having moved higher this year, and many cable firms having been taken private or, in the case of Cablevision Systems, considering going private, market observers have said investor appetite for TWC shares should be healthy.
TW and TWC will not receive any of the proceeds from the planned stock offering. After all, the shares of TWC will be sold either by bankrupt cable operator Adelphia Communications, or by its creditors.
The seller will depend on how fast Adelphia finishes its bankruptcy emergence plan after recently closing the biggest part of a sale of its cable systems to TWC and Comcast Corp.
The first scenario is that TWC's share registration filing Wednesday will get approval from the SEC, which will be followed by an investor road show and a traditional IPO, with Adelphia required to sell off at least one-third of the 16% stake in TWC that it received in the cable system sale. Under an agreement, Adelphia will have to do so within three months of the registration of the offering's becoming effective.
In the second scenario, Adelphia's creditors will have agreed to and completed a bankruptcy reorganization plan and own the TWC shares themselves. In that case, they will sell their shares into the market.
TWC is the second-largest U.S. cable operator behind Comcast. According to Wednesday's SEC filing, it had more than 14 million customer relationships for one or more of its services as of June 30.
TW owns 82.7% of TWC's Class A stock and 100% of its Class B stock, giving the company 90.6% in overall voting power.
Adelphia owns 155.9 million TWC Class A shares, giving it an economic stake of 17.3% and 9.4% voting power.
For the six months ending June 30, TWC made a profit of $530 million, down from $598 million a year ago, according to the SEC filing. Revenue increased from $4.6 billion to $5.3 billion, it said.
In its filing, TWC also said it has no plans to pay cash dividends on its common stock in the future. Instead, it expects to use available cash to further invest in its operations and expansions of its business.