AOL spin-off moves closer

07 April 2009

NEW YORK: Time Warner, the US media company, has moved closer to spinning off AOL, its online arm, after altering the terms of its $12.3 billion (€9.2bn; £8.4bn) in debt, the previous conditions of which would have halted such a move.

The media giant has now offered holders of debt secured against AOL a total of $5 for every $1,000 in debt, which will now also be guaranteed against HBO, its pay-TV arm, rather than its online unit.

Michael Nathanson, an analyst at Bernstein Research, argues this latest move "clears a major hurdle to spin AOL to shareholders," which he thinks could happen in the next few months.

It is thought that Time Warner considered selling AOL last year, before finding it would be too complicated before a spin-off.

Earlier this year Google, the online search company, also took up its right to either resell the 5% stake it owns in AOL back to Time Warner, or to force a registration of its holding.

Data sourced from Financial Times; additional content by WARC staff