By Liana B. Baker
Jan 14 Charter Communications expects
annual synergies of $500 million and other benefits such as tax
savings from its proposed acquisition of Time Warner Cable
, the company said in an investor presentation posted on
its website Tuesday.
The No. 4 cable operator is trying to strike a deal to buy
Time Warner Cable and sway its shareholders after three of its
offers have been rebuffed. On Monday, Charter took its approach
public and proposed paying $132.50 per share, consisting of
around $83 per share in cash and its own stock, in a deal valued
at $37.3 billion that Time Warner Cable's board rejected.
Annual synergies from a deal would grow to $750 million from
$500 million over time, Charter said. The combined company would
have to take on $20.5 billion in new debt, or $72.16 per share,
which would bring it to a leverage ratio of 4.8 times to five
The combined company may also have to do "swaps and
divestitures" to make the regions it serves more efficient,
according to one of the slides in the presentation. Some
analysts have said that No. 1 cable provider Comcast would be
interested in some of Time Warner Cable's markets such as New
York, Los Angeles and Dallas.
Charter also said it was aiming to secure committed bridge
financing of $3.5 billion and would have to pay $600 million in
fees, interest and expenses.
Charter explained in its 30-page presentation how it would
accelerate Time Warner Cable's customer and cash-flow growth,
increase its margins and roll out higher Internet speeds. Time
Warner Cable did not have an immediate response.
Charter, which emerged from bankruptcy in 2009, said it can
use its tax assets, about $7.8 billion in loss carry forwards to
reduce a merged company's operating earnings and tax payments.
These credits would transfer to the combined company, it
said in its presentation to investors, "and should do so without
additional restrictions, allowing NewCo to use Charter's loss
carry forwards against Charter's and TWC's combined taxable
It argued that Time Warner Cable share price would decline
without a deal. Time Warner Cable shares have risen from the
$90s to the $130s since takeover speculation began six months
ago and were trading 3 percent higher on Tuesday at $136.29 per
"Absent a serious M&A alternative, TWC faces significant
potential share price downside," Charter said.
The company ended the presentation saying that it's "time
for shareholders to weigh in if they prefer a combination with
Charter will discuss its presentation it posted and take
analysts' questions on a conference call later on Tuesday.