AOL INC. (AOL)

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Doesn't anybody else on IHUB own AOL stock??

AOL Time Warner CFO eyeing cable IPO in 2nd qtr
NEW YORK, Jan 9 (Reuters) - A top AOL Time Warner Inc. executive told investors on Thursday the world's largest media company hoped to spin off its cable television operations during the second-quarter as part of its effort to begin paring down its weighty debt load.
Under ideal conditions, analysts predicted AOL Time Warner would spin off a stake between 25 and 30 percent of Time Warner Cable, the nation's No. 2 cable operator, raising about $6 billion.
AOL Time Warner Chief Financial Officer Wayne Pace, speaking at the Salomon Smith Barney entertainment conference, said the company was aiming to close this month its agreement to buy Comcast Corp.'s 27.6 percent stake in Time Warner Entertainment for about $9 billion.
"We are looking for a second-quarter initial public offering for the cable company," Pace told investors.
Spinning off its cable operations is part of the company's plans to expand its presence in the sector. The public offering will give the debt-laden company currency and the ability to acquire other cable rivals or take stakes in them.
AOL's $106.2 billion purchase of Time Warner was partially driven by the desire to gain access to cable lines to push high-speed Internet services.
Proceeds from that sale would likely be used to help finance the TWE transaction and pay down AOL Time Warner's
massive debt load, which rests at more than $26 billion. "The big question is, can that much cable paper be floated
in the market?" said CIBC analyst Mike Gallant. "That is going to be a little bit questionable, but this is a very clean set
of assets."
Indeed, the world's largest media company has maintained a running dialogue with several investment banks about handling the possible initial public offering during the past few months, sources said.
It remains too early to project which banks might ultimately be selected as lead bookrunners for the flotation. But the competition for the job is fierce, sources said, since it would provide a healthy dose of fees for the winning institutions, which are still smarting from last year's moribund IPO market.
Fees for handling an IPO that size generally run between 3 percent and 4 percent, meaning a payday of about $200 million for a $6 billion IPO.
That has left several banks jockeying to position themselves as lead bookrunners, including Bank of America Corp.
and Bear Stearns Cos Inc., two institutions with close ties to the New York-based company, sources said.
Bank of America has maintained a long relationship with AOL Time Warner. Last Fall, it stepped in to help value the TWE stake then owned by AT&T Corp., which was purchased by Comcast last year. The deal to unwind a complicated cable and content partnership paved the way to spin-off Time Warner Cable into a publicly traded entity, analysts said.
Bank of America is also one of AOL Time Warner's largest lenders. Last July it helped arrange two new credit lines
totaling $10 billion for the company, then in April helped sell $6 billion of investment-grade debt.
However, the Charlotte, North Carolina-based bank is a second-tier player among IPO managers, having ranked 15th among U.S. bookrunners last year, according to Thomson Securities Data.
Bear Stearns also helped value the TWE stake, and its bankers helped advise the company on its stronger-than-expected bid for AT&T's broadband unit last year. But like Bank of America, it is not considered a major IPO book manager.
Other competitors include Morgan Stanley, which served as Time Warner's primary underwriter for public debt prior to the merger with AOL, sources said. Salomon Smith Barney, the top U.S. IPO book manager during 2002, may also have an inside edge because AOL Time Warner's in-house M&A advisor, Kate Brown, was a former banker there.
Media reports have also suggested Merrill Lynch & Co. Inc. and Goldman Sachs Group Inc. were competing for lead
bookrunner status, as well.
AOL shares jumped following Pace's comments and closed up
45 cents, or 3.24 percent, at $14.33 on the New York Stock
Exchange.