UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): June 21, 2006
TIME WARNER INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 1-15062 13-4099534
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(State or Other (Commission File Number) IRS Employer
Jurisdiction of Incorporation) Identification No.)
One Time Warner Center, New York, New York 10019
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(Address of Principal Executive Offices) (Zip Code)
212-484-8000
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2 below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
As previously reported, on April 21, 2005, Time Warner Inc., a Delaware
corporation (the "Company"), and Comcast Corporation, a Pennsylvania corporation
("Comcast"), announced that they and certain of their respective subsidiaries
and affiliates had entered into definitive agreements relating to the
acquisition of assets comprising, in the aggregate, substantially all the assets
of Adelphia Communications Corporation, a Delaware corporation ("Adelphia"), and
certain other transactions described in the Current Report on Form 8-K dated
April 20, 2005 and filed by the Company with the Securities and Exchange
Commission (the "SEC") on April 21, 2005 (the "April 20 Form 8-K")
(collectively, the "Transactions"). In connection with the acquisition of assets
from Adelphia, Adelphia and Time Warner NY Cable LLC, a Delaware limited
liability company ("TW NY") and a subsidiary of the Company and Time Warner
Cable Inc., a Delaware corporation ("TW Cable"), entered into the Asset Purchase
Agreement, dated as of April 20, 2005 (the "TW Purchase Agreement").
Concurrently, Comcast entered into an asset purchase agreement with Adelphia
(the "Comcast Purchase Agreement"). The TW Purchase Agreement was filed with the
Company's Current Report on Form 8-K dated April 20, 2005 and filed on April 27,
2005.
TW Amendment
On June 21, 2006, Adelphia and TW NY entered into Amendment No. 2 to the TW
Purchase Agreement, which amends the TW Purchase Agreement as set forth in
Exhibit A to Amendment No. 2 (the "TW Amendment"). Concurrently, Adelphia and
Comcast entered into Amendment No. 2 to the Comcast Purchase Agreement, the
terms of which are similar to those of the TW Amendment. Under the terms of the
TW Amendment, the TW Adelphia Acquisition (as defined below) will be effected
pursuant to sections 105, 363 and 365 of title 11 of the United States
Bankruptcy Code (the "363 Sale"). The 363 Sale is subject to approval by the
United States Bankruptcy Court for the Southern District of New York (the
"Bankruptcy Court"), which was granted on June 27, 2006.
Unless Adelphia delivers a Reversion Notice (as defined below), under the TW
Amendment, the creditors of Adelphia will not be required to approve a plan of
reorganization under chapter 11 of the Bankruptcy Code prior to the consummation
of the TW Adelphia Acquisition. As previously reported in the April 20 Form 8-K,
TW NY will purchase certain assets from and assume certain liabilities of
Adelphia (the "TW Adelphia Acquisition"). Under the TW Amendment, the assets
being acquired and the consideration will remain unchanged. However, under the
TW Amendment, pursuant to the registration rights and sale agreement described
below, Adelphia will agree to sell in a registered public offering at least
33-1/3% of the shares of TW Cable's Class A common stock received by Adelphia in
the 363 Sale, unless Adelphia consummates a chapter 11 plan meeting specified
requirements prior to the completion of such offering. Any remaining shares
received by Adelphia are expected to be distributed to Adelphia's creditors
pursuant to a subsequent plan of reorganization under chapter 11 of the
Bankruptcy Code (the "Remainder Plan") to be filed by Adelphia with the
Bankruptcy Court. Under the TW Amendment, the Remainder Plan must be reasonably
satisfactory to TW NY in all material respects.
Under the TW Amendment, the rights of TW NY and Adelphia to terminate the TW
Purchase Agreement will remain in effect; however, except in limited
circumstances, Adelphia may not elect to terminate the TW Purchase Agreement
prior to September 1, 2006. In addition, subject to certain conditions and
exceptions, the TW Amendment provides that, if (i) Adelphia has not delivered a
Reversion Notice (as defined below), (ii) neither the TW Purchase Agreement nor
the Comcast Purchase Agreement has been terminated by TW NY or Comcast,
respectively, prior to September 1, 2006 except, in limited circumstances, if
the Comcast Purchase Agreement is terminated as a result of actions by or the
failure to obtain governmental authorizations from, any governmental antitrust
entity or the Federal Communications Commission and (iii) the closing of the TW
Adelphia Acquisition has not occurred on or before August 31, 2006, then either
(a) the purchase price will be reduced by approximately $353 million or (b) if
the TW Purchase Agreement has been terminated in accordance with its terms,
Adelphia will pay TW NY the termination fee of approximately $353 million upon
the earlier of (x) the consummation of certain sale transactions and (y) the
effective date of a plan of reorganization under chapter 11 of Adelphia and
certain of its affiliates involving a substantial portion of their assets. If
the purchase price is reduced or the termination fee is paid, Adelphia will not
owe TW NY any other termination fee under the TW Purchase Agreement.
Further, under the TW Amendment, Adelphia may, prior to the earlier of (x) July
31, 2006 and (y) the date of approval by the Bankruptcy Court of the 363 Sale
(unless in Adelphia's good faith judgment a chapter 11 plan is more likely to be
consummated than the 363 Sale), deliver to TW NY a notice that it will not
pursue a 363 Sale (a "Reversion Notice"), in which case the changes as set forth
in Exhibit A to the TW Amendment will have no effect as of the date of the
Reversion Notice and the TW Purchase Agreement will be deemed unchanged by the
TW Amendment except as set forth on Exhibit B to the TW Amendment. Exhibit B to
the TW Amendment does not provide for the changes associated with the 363 Sale
discussed above and instead incorporates only those changes that are unrelated
to the 363 Sale.
The TW Amendment removes (in the case of either Exhibit A or Exhibit B) the
requirement that the shares of TW Cable common stock to be issued to Adelphia
pursuant to the TW Purchase Agreement be listed on the New York Stock Exchange
as a condition to the closing. TW NY is obligated to use commercially reasonable
efforts to effect such listing as of the closing and in any event, not later
than two weeks following the closing (or, if such listing is not effected within
a reasonable period, on the Nasdaq Stock Market) or, in the case of the 363
Sale, in accordance with the RRA (as defined below) or in connection with the
Remainder Plan.
Registration Rights and Sale Agreement
If the TW Adelphia Acquisition is effected pursuant to the 363 Sale, Adelphia
and TW Cable will enter into a registration rights and sale agreement (the
"RRA") at the closing of the TW Adelphia Acquisition. Under the RRA, Adelphia
will be required to sell, in a registered underwritten public offering (the
"Offering"), at least 33-1/3% of the shares of TW Cable's Class A common stock
received by Adelphia in the 363 Sale (inclusive of any over allotment option) no
later than three months following the effectiveness of a registration statement
filed by TW Cable to effect such sale, subject to customary rights to delay for
a limited period of time under certain circumstances. TW Cable will be required
to use its commercially reasonable efforts to (i) file a registration statement
as promptly as practicable following the closing of the TW Adelphia Acquisition,
but in any event not later than the later of (x) five months following the
closing of the TW Adelphia Acquisition and (y) January 31, 2007; (ii) have such
registration statement declared effective as promptly as practicable after
filing and (iii) keep the registration statement continuously effective as set
forth in the RRA. Notwithstanding the above, in the event that a Remainder Plan
meeting specified requirements is consummated prior to the consummation of the
Offering, the obligations of the parties to the RRA will terminate and TW Cable
may withdraw or terminate the registration statement, whether or not it has been
declared effective.
Under the RRA, Adelphia will have one and, under certain circumstances, up to
two demand registration rights exercisable after the Offering. In addition to
its demand registration right, Adelphia will also have customary "piggyback"
rights to specified public offerings by TW Cable after the Offering.
Comcast Letter Agreement
On June 21, 2006, TW Cable, TWE Holdings II Trust (the "Comcast Trust"), Comcast
and Adelphia entered into a letter agreement relating to offerings of TW Cable
Class A common stock by Adelphia and the Comcast Trust (the "Letter Agreement").
The Letter Agreement provides that if the redemption of the Comcast Trust's
existing interest in TW Cable is not consummated on or before November 1, 2006
as contemplated in the redemption agreement described in the April 20 Form 8-K,
between TW Cable and the Comcast Trust, the Comcast Trust will have priority
over any shares of TW Cable Class A common stock to be sold by Adelphia. In
addition, the Comcast Trust will have the ability to defer certain distributions
by Adelphia of the TW Cable Class A common stock it receives in the TW Adelphia
Acquisition until November 17, 2007 in favor of one or more public offerings of
the Comcast Trust's TW Class A common stock. Adelphia's ability to distribute
its TW Cable Class A common stock will also be subject to lock-up periods
following public offerings of Comcast's TW Cable Class A common stock. Under the
Letter Agreement, unless (i) the Offering has occurred, (ii) Adelphia's
obligation to effect the Offering has been terminated as described above, or
(iii) TW Cable consents, the Comcast Trust may not consummate the first public
offering of its TW Cable Class A common stock unless the reasonably expected net
proceeds to the Comcast Trust are at least $1.5 billion in the aggregate.
This report does not constitute an offer of any security for sale.
Cautionary Statements
The foregoing descriptions of the terms of the TW Amendment, the RRA and the
Comcast Letter Agreement do not purport to be complete and are qualified in
their entirety by reference to each of the TW Amendment, the RRA and the Comcast
Letter Agreement, as applicable, which will be included in a subsequent filing
with the Securities and Exchange Commission.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TIME WARNER INC.
By: /s/ Wayne H. Pace
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Name: Wayne H. Pace
Title: Executive Vice President and
Chief Financial Officer
Date: June 27, 2006