From: Reuters
Published May 21, 2008 03:10 AM

Time Warner to get fat dividend from cable arm: WSJ

(Reuters) - Time Warner Inc <TWX.N> is expected to reap $9.25 billion from a $10-per-share special dividend to be paid by the cable unit it is spinning off, the Wall Street Journal said on Wednesday, citing people familiar with the situation.

The dividend from Time Warner Cable Inc <TWC.N> is expected to be announced when Time Warner unveils details of the spin-off, the newspaper said. Time Warner holds a stake of about 84 percent stake in its cable arm.

In late April, Time Warner said it planned to fully separate its cable unit, responding to Wall Street's demands to refocus as a pure media content company to boost an ailing stock price and to make its results easier to forecast.

Time Warner will slash its $34.6 billion debt load, which includes cable debt, by two-thirds, the newspaper said, adding that the company has net debt of $13 billion and will borrow to pay the $10.9 billion dividend.

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The split is likely to take place in three steps, the paper said. The first would involve unwinding a related holding company called New York Group, increasing Time Warner's cable stake to 85.2 percent.

Time Warner Cable would then pay the dividend, shifting debt onto its balance sheet. Then Time Warner would allocate its stake to its shareholders through a stock dividend or some other means, depending on the conditions, the WSJ said.

No one at Time Warner was immediately available to comment.

Shares of Time Warner closed Tuesday at $16.15. They have fallen over 25 percent in the last year.

(Reporting by Ajay Kamalakaran; Editing by Louise Ireland)

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