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S&P keeps AOL Time Warner on watch
Standard & Poor's said AOL Time Warner Inc. remains on CreditWatch negative including its corporate credit at BBB+.
S&P's continuing watch comes after the company announced a settlement of its litigation with Microsoft Corp. in which Microsoft will pay AOL Time Warner $750 million in cash.
The agreement represents a positive move, which will contribute to AOL Time Warner's debt reduction targets and follows the company's $1.225 billion received in the sale of its stake in Comedy Central and the $783 million obtained in the sale of its stake in Hughes Electronics Corp., S&P said. The company continues to pursue the sale of its CD and DVD manufacturing operations as well as certain sports franchises.
At the same time, the company has one-time commitments in 2003 including payments concluding litigation regarding its former theme park unit, catch-up pension contributions, the acquisitions of Vivendi Universal SA's interest in AOL Europe and an additional stake in the WB Network, and remaining capital expenditures related to the company's new headquarters, S&P said.
Beyond these items, which total roughly $1.9 billion, and the $2.1 billion paid to Comcast Corp. in the restructuring of Time Warner Entertainment, AOL Time Warner also will have a roughly $750 million increase in balance sheet debt in 2003 related to FIN 46 consolidation of special purpose entities. The expected IPO of Time Warner Cable Inc., intended to raise $2.1 billion for debt reduction, has been delayed until the fall.
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