Fresh from posting corporate America’s largest ever quarterly loss [WAMN: 30-Jan-03], floundering media mammoth AOL Time Warner faces billions of dollars of new debts in the coming months, the company has revealed.
AOL TW has warned credit ratings agencies that on top of its existing $25.8 billion (€23.8bn; £15.7bn) debt Everest, it must assume a further $2.1bn connected with the restructuring of its cable-TV businesses, $800 million for its new Manhattan headquarters and up to $800m to buy the rest of America Online’s European arm.
The new debts will not help the group’s drive to reduce what it owes to a mere $20bn by 2004. However, chief financial officer Wayne Pace insists there is no danger of a cash shortage, as AOL TW still has $7.9bn in borrowing capacity.
Nevertheless, Standard & Poor’s warned the extra debt means the media giant must have a strong year in 2003 to avoid a potential drop in its credit rating.
• There was further bad news for AOL TW with reports that the inquiry into the improper booking of ad revenues at America Online is widening.
The Federal Bureau of Investigation is seeking to question former executives of defunct dotcom PurchasePro.com, reportedly in connection with the investigation into AOL’s ad deals by the Justice Department and the Securities & Exchange Commission.
At the heart of the probe are deals made by former AOL executives David Colburn and Eric Keller. The latter negotiated an ad agreement with PurchasePro in March 2000.
Data sourced from: multiple sources; additional content by WARC staff