Copyright 2004 MarketWatch.com Inc., All Rights Reserved
September 27, 2004
Comcast said Monday that it has an option to cut its stake in Time Warner Cable to 17 percent from 21 percent in exchange for stock in a unit that will hold cable-television systems and cash.
Philadelphia-based Comcast ranks as the largest U.S. cable operator, while Time Warner Cable is the second-biggest entity in the industry.
In a joint press release, Time Warner Chairman Dick Parsons said the looming deal with Comcast signifies a "mutually beneficial outcome" for the two companies, which have been waging a battle for cable supremacy.
The agreement gives Comcast the option, which can be exercised between Dec. 1 and April 1, 2005, to require Time Warner Cable to redeem a portion of the Time Warner Cable common stock held by a trust controlled by Comcast in exchange for all of the common stock of a Time Warner Cable subsidiary.
At the time of such a swap, the unit will own cable systems serving some 90,000 basic subscribers and will have about $750 million in cash. In addition, the Comcast trust agreed not to request prior to next April 1 that Time Warner Cable register the shares in Time Warner Cable held by the trust for sale in a public offering.
Comcast's shares eased 4 cents to $27.63 on Friday, while Time Warner slipped 3 cents to end at $16.50.