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TCI, Time swap cable ops
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September 3, 1997: 7:20 p.m. ET
Move is designed to reduce debt, costs; TCI to review new stock with analysts
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NEW YORK (CNNfn) - The nation's top two cable system operators, Tele-Communications Inc. and Time Warner Inc., on Wednesday announced agreements on several fronts.
Under a letter of intent, the two companies agreed to expand an existing joint venture in Kansas City, create two separate ventures in Texas, as well as swap certain cable systems. The agreements involve 2 million cable customers.
The partnerships between TCI Communications Inc. - the company's domestic communications unit -- and Time Warner's Entertainment division are expected to result in an unspecified amount of savings as both companies spread the cost base of the systems throughout the affected regions.
More importantly, the joint ventures will allow TCI to reduce nearly $990 million of debt from its balance sheet. Time Warner is expecting to transfer nearly $650 million of debt from its balance sheets onto the joint ventures.
In addition, Time Warner contributed an undisclosed amount of equity into the ventures. Time Warner Cable, serving as managing partner, will also receive an unspecified management fee from the ventures.
The transactions are subject to the execution of a definitive agreement as well as regulatory and board approvals.
The joint ventures come one day before TCI officials are scheduled to meet with investors in New York to review plans to launch a new class of stock, designed to track the performance of its international and telecommunications businesses.
The new class of stock, TCI Ventures Group, will include Teleport Communications Group Inc., Sprint Spectrum LLP, @Home Corp., and Tele-Communications International Inc.
Unveiled in June, the stock is scheduled to become effective Sept. 10. However, shares are trading on a when-issued basis at about 19-1/2, above the 17-1/2 price of TCI's class A shares.
-- Robert Liu
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