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): July 31, 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 Jurisdiction of (Commission File Number) (IRS Employer
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 2.01 Completion of Acquisition or Disposition of Assets.
On July 31, 2006, Time Warner Inc., a Delaware corporation ("Time Warner" or the
"Company"), and Comcast Corporation, a Pennsylvania corporation ("Comcast"),
issued a joint press release announcing that the Adelphia Acquisition (as
defined below) had closed on July 31, 2006 and that the redemption of Comcast's
interests in Time Warner Cable Inc., a Delaware corporation ("TWC"), and Time
Warner Entertainment Company, L.P., a Delaware limited partnership ("TWE") and
a subsidiary of TWC, and the Cable Swaps (as defined below) had been completed.
A copy of the press release dated July 31, 2006 is attached as Exhibit 99.1.
As previously reported, on April 21, 2005, Time Warner and Comcast announced
that they and certain of their respective subsidiaries and affiliates had
entered into separate definitive agreements (the "TW Purchase Agreement" and the
"Comcast Purchase Agreement," respectively) with Adelphia Communications
Corporation, a Delaware corporation ("Adelphia"), to, collectively, acquire
substantially all of the cable systems managed by Adelphia (the "Adelphia
Acquisition"). On June 21, 2006, Adelphia and Time Warner NY Cable LLC, a
Delaware limited liability company ("TW NY") and a subsidiary of TWC, entered
into Amendment No. 2 to the TW Purchase Agreement (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 assets TW NY acquired from Adelphia and
the consideration it paid remained unchanged. However, the TW Amendment provided
that the Adelphia Acquisition would be effected pursuant to sections 105, 363
and 365 of Title 11 of the United States Bankruptcy Code (the "363 Sale") and
the creditors of Adelphia would not be required to approve a plan of
reorganization under Chapter 11 of the Bankruptcy Code prior to the consummation
of the Adelphia Acquisition. In connection with the closing of the Adelphia
Acquisition, TW NY paid approximately $8.9 billion in cash, after giving effect
to certain purchase price adjustments, and shares representing 16% of TWC's
common stock for the Adelphia assets it acquired.
At the closing of the Adelphia Acquisition, Adelphia and TWC entered into a
registration rights and sale agreement (the "RRA"). Under the RRA, Adelphia is
required to sell, in a registered underwritten public offering (the "Offering"),
at least one-third of the shares of TWC Class A common stock it received in the
Adelphia Acquisition within three months following the effectiveness of a
registration statement filed by TWC to effect such sale, subject to customary
rights to delay for a limited period of time under certain circumstances. TWC is
required to use its commercially reasonable efforts to file a registration
statement covering these shares as promptly as practicable and to cause the
registration statement to be declared effective as promptly as practicable after
filing, but in any event not later than January 31, 2007. Any remaining shares
received by Adelphia in the Adelphia Acquisition 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 United States Bankruptcy Court for the Southern District of New York
(the "Bankruptcy Court"). If a Remainder Plan meeting specified requirements is
consummated prior to the closing of the Offering, the shares of TWC Class A
common stock received by Adelphia in the Adelphia Acquisition would be
distributed to Adelphia's creditors under Section 1145 of the Bankruptcy Code in
accordance with the terms of such plan and the Offering would not occur. The
shares distributed to Adelphia's creditors under the Remainder Plan would be
freely transferable, subject to certain exceptions.
At the same time that TW NY and Comcast entered into the TW Purchase Agreement
and the Comcast Purchase Agreement, respectively, TWC, Comcast, and/or their
respective affiliates entered into separate agreements providing for the
redemption of Comcast's interests in TWC and TWE (the "TWC Redemption Agreement"
and the "TWE Redemption Agreement," respectively, and, collectively, the "TWC
and TWE Redemption Agreements"). These redemptions also occurred on July 31,
2006, immediately before the closing of the Adelphia Acquisition, and were
funded through the issuance of TWC commercial paper, borrowings under the Cable
Revolving Facility (as defined below) and cash on hand. Specifically, Comcast's
17.9% interest in TWC was redeemed in exchange for 100% of the capital stock of
a subsidiary of TWC holding both cable systems serving approximately 589,000
subscribers (based on June 30, 2006 information) and approximately $1.9 billion
in cash. In addition, Comcast's 4.7% interest in TWE was redeemed in exchange
for 100% of the equity interests in a subsidiary of TWE holding both cable
systems serving approximately 162,000 subscribers (based on June 30, 2006
information) and approximately $147 million in cash.
Following these redemptions and the Adelphia Acquisition, on July 31, 2006, TWC,
Comcast and their respective subsidiaries also swapped certain cable systems to
enhance their respective geographic clusters of subscribers (the
"Cable Swaps") and TW NY paid Comcast approximately $67 million for certain
adjustments related to the Cable Swaps.
As a result of the closing of the Adelphia Acquisition, the TWC and TWE
redemptions and the Cable Swaps, TWC gained systems with approximately 3.3
million basic subscribers. As of July 31, 2006, Time Warner owns 84% of TWC's
common stock (including 83% of the outstanding TWC Class A common stock and all
outstanding shares of TWC Class B common stock), as well as an indirect
approximately 12% non-voting interest in TW NY, a subsidiary of TWC. As of July
31, 2006, the remaining 16% of TWC's common stock is held by Adelphia, and
Comcast has no interest in TWC or TWE.
This report does not constitute an offer to sell or the solicitation of an offer
to buy any security and shall not constitute an offer, solicitation or sale of
any securities in any jurisdiction in which such offering, solicitation or sale
would be unlawful.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
As a result of the Adelphia Acquisition, the TWC and TWE redemptions and the
Cable Swaps, the net indebtedness of the Company increased by approximately
$11.0 billion (including the Series A Preferred Equity Membership Units
described below).
In connection with the closing of the Adelphia Acquisition, TW NY paid
approximately $8.9 billion in cash, after giving effect to certain purchase
price adjustments, that was funded by an intercompany loan from TWC and the
proceeds of the private placement issuance by TW NY of $300 million of
non-voting Series A Preferred Equity Membership Units with a mandatory
redemption date of August 1, 2013 and a cash dividend of 8.21% per annum. The
intercompany loan was financed by borrowings under TWC's $6.0 billion senior
unsecured five-year revolving credit facility with a maturity date of February
15, 2011 (the "Cable Revolving Facility") and TWC's two $4.0 billion term loan
facilities (collectively with the Cable Revolving Facility, the "Cable
Facilities"), with maturity dates of February 24, 2009 and February 21, 2011,
respectively, and the issuance of TWC commercial paper.
For more information on the Cable Facilities, see "Management's Discussion and
Analysis of Results of Operations and Financial Condition--Financial Condition
and Liquidity--Bank Credit Agreements and Commercial Paper Programs--TWC Inc.
Credit Agreements" in the Company's Annual Report on Form 10-K for the year
ended December 31, 2005 (the "2005 Form 10-K"). The Cable Revolving Facility was
filed as Exhibit 10.51 to the 2005 Form 10-K and TWC's five-year term loan
credit agreement and TWC's three-year term loan credit agreement were filed as
Exhibits 10.52 and 10.53, respectively, to the 2005 Form 10-K.
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
The financial statements required by Item 9.01(a) of Form 8-K will be filed
by amendment to this Current Report on Form 8-K within 71 calendar days after
August 4, 2006, the date by which this Current Report must be filed.
(b) Pro Forma Financial Information.
The pro forma financial information required by Item 9.01(b) of Form 8-K
will be filed by amendment to this Current Report on Form 8-K within 71 calendar
days after August 4, 2006, the date by which this Current Report must be filed.
(c) Shell Company Transactions. Not applicable.
(d) Exhibits.
Exhibit Description
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99.1 Press Release, dated July 31, 2006, issued by Time Warner Inc.
and Comcast Corporation.
99.2 Asset Purchase Agreement, dated as of April 20, 2005, between
Adelphia Communications Corporation ("Adelphia") and Time Warner
NY Cable LLC ("TW NY") (incorporated herein by reference to
Exhibit 99.1 to the Company's Current Report on Form 8-K dated
April 20, 2005).
99.3 Amendment No. 1, dated June 24, 2005, to the Asset Purchase
Agreement dated as of April 20, 2005 between Adelphia and TW NY
(incorporated herein by reference to Exhibit 10.5 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2005).
99.4 Amendment No. 2, dated June 21, 2006, to the Asset Purchase
Agreement dated as of April 20, 2005 between Adelphia and TW NY
(incorporated herein by reference to Exhibit 10.2 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2006 (the "June 2006 Form 10-Q")).
99.5 Amendment No. 3, dated June 26, 2006, to the Asset Purchase
Agreement dated as of April 20, 2005 between Adelphia and TW NY
(incorporated herein by reference to Exhibit 10.3 to the June
2006 Form 10-Q).
99.6 Amendment No. 4, dated July 31, 2006, to the Asset Purchase
Agreement dated as of April 20, 2005 between Adelphia and TW NY
(incorporated herein by reference to Exhibit 10.6 to the June
2006 Form 10-Q).
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: August 2, 2006
EXHIBIT INDEX
Exhibit Description
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99.1 Press Release, dated July 31, 2006, issued by Time Warner Inc.
and Comcast Corporation.
99.2 Asset Purchase Agreement, dated as of April 20, 2005, between
Adelphia Communications Corporation ("Adelphia") and Time Warner
NY Cable LLC ("TW NY") (incorporated herein by reference to
Exhibit 99.1 to the Company's Current Report on Form 8-K dated
April 20, 2005).
99.3 Amendment No. 1, dated June 24, 2005, to the Asset Purchase
Agreement dated as of April 20, 2005 between Adelphia and TW NY
(incorporated herein by reference to Exhibit 10.5 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2005).
99.4 Amendment No. 2, dated June 21, 2006, to the Asset Purchase
Agreement dated as of April 20, 2005 between Adelphia and TW NY
(incorporated herein by reference to Exhibit 10.2 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2006 (the "June 2006 Form 10-Q")).
99.5 Amendment No. 3, dated June 26, 2006, to the Asset Purchase
Agreement dated as of April 20, 2005 between Adelphia and TW NY
(incorporated herein by reference to Exhibit 10.3 to the June
2006 Form 10-Q).
99.6 Amendment No. 4, dated July 31, 2006, to the Asset Purchase
Agreement dated as of April 20, 2005 between Adelphia and TW NY
(incorporated herein by reference to Exhibit 10.6 to the June
2006 Form 10-Q).