Report: Spinoff Of AOL Likely
April 7, 2009 at 5:25 AM (PT)
TIME WARNER's long-expected spinoff of AOL yesterday moved a step closer to becoming a reality, as the company asked debtholders to agree to alter loan terms that would pave the way for an ownership change at the Internet and Internet Radio unit, reports THE NEW YORK POST.
TIME WARNER plans to amend covenants on $12.3 billion in outstanding debt and is offering bondholders who agree to the new terms a $5 payment for each $1,000 of debt tendered.
The plan would cost TIME WARNER $61.5 million if all the bondholders agreed to the exchange. The company is using its premium cable channel HBO as collateral for the exchange.
The plan follows TIME WARNER's hiring of former GOOGLE executive TIM ARMSTRONG to run AOL and is another sign that the company is more likely to spin off rather than sell AOL.
Only last year the Web unit was valued at about $10 billion. TODAY, however, analysts think it is worth less than $2.5 billion on a standalone basis.