e424b3
This
preliminary prospectus supplement relates to an effective
registration statement under the Securities Act of 1933, but is
not complete and may be changed. This preliminary prospectus
supplement and the accompanying prospectus are not an offer to
sell these securities and are not soliciting an offer to buy
these securities in any jurisdiction where the offer or sale is
not permitted.
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Filed Pursuant to Rule 424(b)(3)
File No.: 333-165156
SUBJECT TO
COMPLETION, DATED MARCH 3, 2010
PROSPECTUS SUPPLEMENT
(To Prospectus Dated March 3, 2010)
$
$ % Notes
due 2020
$ % Debentures
due 2040
The notes and debentures will be issued by Time Warner Inc. The
notes and debentures will be guaranteed by Historic TW Inc. In
addition, Home Box Office, Inc. and Turner Broadcasting System,
Inc. will guarantee Historic TW Inc.s guarantee of the
notes and debentures. We use the term notes to refer
to the % Notes due 2020, and
we use the term debentures to refer to
the % Debentures due 2040. We
use the terms debt securities and
securities to refer to the notes and the debentures.
The notes will mature on March , 2020 and the
debentures will mature on March , 2040. Interest on
the notes and debentures will be payable semi-annually in
arrears on March and September of each
year, beginning on September , 2010. We may redeem
some or all of the notes or debentures at any time or from time
to time, as a whole or in part at our option, at the redemption
prices set forth under the heading Description of the
Notes and the Debentures Optional Redemption.
The securities will be senior unsecured obligations of Time
Warner Inc. and will rank equally with all of Time Warner
Inc.s other existing and future senior unsecured
obligations. The guarantees will be the senior unsecured
obligations of the applicable guarantor and will rank equally
with all other senior unsecured obligations of the applicable
guarantor.
The securities will not be listed on any securities exchange.
Currently, there is no public market for the securities.
Investing in the securities involves risks. See
Risk Factors beginning on page S-3 of this
prospectus supplement.
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Proceeds Before
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Public Offering
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Underwriting
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Expenses to
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Price(1)
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Discount
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Time Warner
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Per Note due 2020
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%
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%
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%
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Total
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$
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$
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$
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Per Debenture due 2040
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%
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%
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%
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Total
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$
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$
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$
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(1) |
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Plus accrued interest from March , 2010, if
settlement occurs after that date. |
Neither the Securities and Exchange Commission nor any state
or foreign securities commission has approved or disapproved of
these securities or determined if this prospectus supplement or
the accompanying prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
Delivery of the securities in book-entry form only will be made
through The Depository Trust Company, Clearstream Banking
S.A. Luxembourg and the Euroclear System, on or about
March , 2010 against payment in immediately
available funds.
Joint Book-Running Managers
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BofA
Merrill Lynch |
Citi |
Deutsche Bank Securities Morgan
Stanley |
The date of this Prospectus Supplement is
March , 2010
TABLE OF
CONTENTS
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Page
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Prospectus Supplement
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S-ii
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S-1
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S-3
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S-5
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S-6
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S-13
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S-17
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S-19
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Prospectus
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About this Prospectus
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1
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Where You Can Find More Information
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1
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Incorporation by Reference
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2
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Statements Regarding Forward-Looking Information
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3
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The Company
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5
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Risk Factors
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6
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Ratio of Earnings to Fixed Charges
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6
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Use of Proceeds
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7
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Description of the Debt Securities and the Guarantees
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8
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Description of the Capital Stock
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19
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Description of the Warrants
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21
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Plan of Distribution
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23
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Legal Opinions
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26
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Experts
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26
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S-i
ABOUT
THIS PROSPECTUS SUPPLEMENT
This document is in two parts. The first part is this prospectus
supplement, which describes the terms of the securities that we
are currently offering. The second part is the accompanying
prospectus, which gives more general information, some of which
may not apply to the securities that we are currently offering.
Generally, the term prospectus refers to both parts
combined.
This prospectus supplement supplements disclosure in the
accompanying prospectus. If the information varies between this
prospectus supplement and the accompanying prospectus, you
should rely on the information in this prospectus supplement.
It is expected that delivery of the securities will be made
against payment therefor on or about the date specified on the
cover of this prospectus supplement, which is the sixth business
day following the date of pricing of the securities (such
settlement cycle being referred to as T+6). You
should note that trading of the securities on the date of
pricing or on the next two succeeding business days may be
affected by the T+6 settlement. See Underwriting
beginning on page S-17 of this prospectus supplement.
You should rely only on the information contained in or
incorporated by reference in this prospectus supplement and the
accompanying prospectus or in any applicable free writing
prospectus. No person is authorized to provide you with
different information or to offer the securities in any state or
other jurisdiction where the offer is not permitted. You should
not assume that the information provided by this prospectus
supplement, the accompanying prospectus or in any applicable
free writing prospectus is accurate as of any date other than
the date of the applicable document.
References to Time Warner, the Company,
our company, we, us and
our in this prospectus supplement are references to
Time Warner Inc. Historic TW Inc. is referred to herein as
Historic TW. Home Box Office, Inc. is referred to
herein as HBO. Turner Broadcasting System, Inc. is
referred to herein as TBS, and, together with
Historic TW and HBO, the Guarantors. Terms used in
this prospectus supplement that are otherwise not defined will
have the meanings given to them in the accompanying prospectus.
The securities are being offered only for sale in jurisdictions
where it is lawful to make such offers. The distribution of this
prospectus supplement and the accompanying prospectus and the
offering of the securities in some jurisdictions may be
restricted by law. Persons who receive this prospectus
supplement and the accompanying prospectus should inform
themselves about and observe any such restrictions. This
prospectus supplement and the accompanying prospectus do not
constitute, and may not be used in connection with, an offer or
solicitation by anyone in any jurisdiction in which such offer
or solicitation is not authorized or in which the person making
such offer or solicitation is not authorized or in which the
person making such offer or solicitation is not qualified to do
so or to any person to whom it is unlawful to make such offer or
solicitation. See Underwriting beginning on
page S-17 of this prospectus supplement.
S-ii
SUMMARY
Time
Warner
Time Warner, a Delaware corporation, is a leading media and
entertainment company. The Company classifies its businesses
into the following three reporting segments:
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Networks, consisting principally of cable television networks
that provide programming;
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Filmed Entertainment, consisting principally of feature film,
television and home video production and distribution; and
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Publishing, consisting principally of magazine publishing.
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For a description of our business, financial condition, results
of operations and other important information regarding us, see
our filings with the Securities and Exchange Commission (the
SEC) incorporated by reference in the accompanying
prospectus. For instructions on how to find copies of these and
our other filings incorporated by reference in the accompanying
prospectus, see Where You Can Find More Information
in the accompanying prospectus.
Our principal executive office, and that of the Guarantors
except as noted below, is located at One Time Warner Center, New
York, NY
10019-8016,
telephone
(212) 484-8000.
Guarantors
Historic TW is a wholly owned subsidiary of Time Warner.
Historic TW is a holding company with substantially the same
business interests as Time Warner. It derives its operating
income and cash flow from its investments in its subsidiaries,
which include HBO, TBS, Warner Bros. Entertainment Inc. and Time
Inc.
HBO is a wholly owned subsidiary of Time Warner. It derives its
operating income and cash flow from its own operations and also
from its subsidiaries and investments. The primary activities of
HBO and its subsidiaries include the operation of the
HBO and Cinemax premium pay television
services, with the HBO service ranking as the most widely
distributed premium pay television service in the United States.
The principal executive office of HBO is located at 1100 Avenue
of the Americas, New York, NY
10036-6712,
telephone
(212) 512-1000.
TBS is a wholly owned indirect subsidiary of Time Warner. It
derives its operating income and cash flow from its own
operations and also from its subsidiaries and investments. The
primary activities of TBS and its subsidiaries include the
operation of cable networks in the United States and
internationally. The principal executive office of TBS is
located at One CNN Center, Atlanta, GA 30303, telephone
(404) 827-1700.
S-1
The
Offering
The summary below describes the principal terms of the
securities offering and is not intended to be complete. You
should carefully read the Description of the Notes and the
Debentures section of this prospectus supplement and
Description of the Debt Securities and the
Guarantees in the accompanying prospectus for a more
detailed description of the securities offered hereby.
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Issuer |
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Time Warner Inc. |
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Securities |
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$ aggregate principal amount
of % Notes due 2020 |
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$ aggregate principal amount
of % Debentures due 2040 |
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Maturity Dates |
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% Notes:
March , 2020 |
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% Debentures:
March , 2040 |
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Interest Payment Dates |
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March and September of each
year, commencing September , 2010 |
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Guarantees |
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The securities will be fully, irrevocably and unconditionally
guaranteed by Historic TW. In addition, HBO and TBS will fully,
irrevocably and unconditionally guarantee Historic TWs
guarantee of the securities. |
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Ranking |
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The securities will be our senior unsecured obligations, and
will rank equally with our other senior unsecured obligations. |
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The guarantees will be senior unsecured obligations of Historic
TW, HBO and TBS, as applicable, and will rank equally with other
senior unsecured obligations of Historic TW, HBO and TBS,
respectively. |
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Optional Redemption |
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We may redeem some or all of the securities at any time or from
time to time, as a whole or in part, at our option, at the
redemption prices described in this prospectus supplement. |
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Use of Proceeds |
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We intend to use the proceeds from this offering to repay,
repurchase or redeem existing indebtedness and for general
corporate purposes. |
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No Listing |
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We do not intend to apply for the listing of the securities on
any securities exchange or for the quotation of the securities
in any dealer quotation system. |
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Trustee |
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The Bank of New York Mellon |
Recent
Developments
On March 3, 2010, Time Warner commenced a tender offer (the
Tender Offer) to purchase any and all of its
outstanding 6.75% Notes due 2011 for cash.
The closing of the offering of securities contemplated by this
prospectus supplement is not conditioned on the consummation of
the Tender Offer, and the closing of the Tender Offer is not
conditioned on the consummation of the offering of securities
contemplated by this prospectus supplement.
S-2
RISK
FACTORS
Investing in the securities involves risks. Before purchasing
any securities, you should carefully consider the specific
factors discussed below, together with all the other information
contained in this prospectus supplement, the accompanying
prospectus and the documents incorporated by reference herein or
therein. For a further discussion of the risks, uncertainties
and assumptions relating to our business, please see the
discussion under the caption Risk Factors included
in our Annual Report on
Form 10-K
for the year ended December 31, 2009, as updated by annual,
quarterly and other reports and documents we file with the SEC
which are incorporated by reference in this prospectus
supplement and the accompanying prospectus.
Risks
Related to the Securities
An
increase in interest rates could result in a decrease in the
relative value of the securities.
In general, as market interest rates rise, securities bearing
interest at a fixed rate generally decline in value because the
premium, if any, over market interest rates will decline.
Consequently, if you purchase these securities and market
interest rates increase, the market value of your securities may
decline. We cannot predict the future level of market interest
rates.
Ratings
of the securities may not reflect all risks of an investment in
the securities.
We expect that the securities will be rated by at least one
nationally recognized statistical rating organization. The
ratings of the securities will primarily reflect our financial
strength and will change in accordance with the rating of our
financial strength. A debt rating is not a recommendation to
purchase, sell or hold the securities. These ratings do not
correspond to suitability for a particular investor.
Additionally, ratings may be lowered or withdrawn in their
entirety at any time.
The
securities do not restrict our ability to incur additional debt
or prohibit us from taking other actions that could negatively
impact holders of the securities.
We are not restricted under the terms of the indenture governing
the securities from incurring additional indebtedness. The terms
of the indenture limit our ability to secure additional debt
without also securing the securities and to enter into sale and
leaseback transactions. However, these limitations are subject
to numerous exceptions. See Description of the Debt
Securities and the Guarantees in the accompanying
prospectus. In addition, the securities do not require us to
achieve or maintain any minimum financial ratios. Our ability to
recapitalize, incur additional debt, secure existing or future
debt or take a number of other actions that are not limited by
the terms of the indenture, including repurchasing indebtedness
or common shares or preferred shares, if any, or paying
dividends, could have the effect of diminishing our ability to
make payments on the securities when due.
Our
financial performance and other factors could adversely impact
our ability to make payments on the securities.
Our ability to make scheduled payments with respect to our
indebtedness, including the securities, will depend on our
financial and operating performance, which, in turn, are subject
to prevailing economic conditions and to financial, business and
other factors beyond our control.
The
securities will be unsecured and therefore will effectively be
subordinated to any secured debt.
The securities will not be secured by any of our assets or those
of our subsidiaries. As a result, the securities are effectively
subordinated to any secured debt we may incur. In any
liquidation, dissolution, bankruptcy or other similar
proceeding, the holders of our secured debt may assert rights
against the secured assets in order to receive full payment of
their debt before the assets may be used to pay the holders of
the securities.
S-3
The
securities are effectively subordinated to the liabilities of
our non-guarantor subsidiaries.
The securities will be effectively subordinated to all existing
and future indebtedness and other liabilities of our
non-guarantor subsidiaries. In the event of a bankruptcy,
liquidation or similar proceeding with respect to a
non-guarantor subsidiary, following payment by the subsidiary of
its liabilities, the subsidiary may not have sufficient assets
to make payments to us. As of December 31, 2009, our
non-guarantor subsidiaries had approximately $90.9 million
of outstanding indebtedness (excluding intercompany debt and
liabilities and accounts payable incurred in the ordinary course
of business).
An
active trading market may not develop for the securities, which
could adversely affect the price of the securities in the
secondary market and your ability to resell the securities
should you desire to do so.
The securities are a new issue of securities and there is no
established trading market for the securities. We do not intend
to apply to list the securities for trading on any securities
exchange or to arrange for quotation on any automated dealer
quotation system.
As a result of this and the other factors listed below, an
active trading market for the securities may not develop, in
which case the market price and liquidity of the securities may
be adversely affected.
In addition, you may not be able to sell your securities at a
particular time or at a price favorable to you. Future trading
prices of the securities will depend on many factors, including:
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our operating performance and financial condition;
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our prospects or the prospects for companies in our industries
generally;
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the interest of securities dealers in making a market in the
securities;
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the market for similar securities;
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prevailing interest rates; and
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the risk factors described in our Annual Report on
Form 10-K
for the year ended December 31, 2009.
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We have been advised by the underwriters that they intend to
make a market for the securities, but they have no obligation to
do so and may discontinue market-making at any time without
providing any notice.
S-4
USE OF
PROCEEDS
The net proceeds from this offering are estimated to be
approximately $ billion,
after deducting the underwriting discount and our estimated
offering expenses. We intend to use a portion of the net
proceeds to repay, repurchase or redeem outstanding
indebtedness, including the reduction of all amounts outstanding
under our accounts receivable securitization facilities, which
we then intend to terminate, and to use the remaining net
proceeds for general corporate purposes. Our accounts receivable
securitization facilities bear interest at a floating rate, and
as of December 31, 2009, our accounts receivable
securitization facilities had outstanding amounts of
$805 million, and an average interest rate of approximately
1.39% per annum. On January 25, 2010, in anticipation of
the net proceeds from this offering, we reduced the amount
outstanding under our accounts receivable securitization
facilities to $200 million.
In addition, in connection with the Tender Offer, we intend to
purchase any or all of our outstanding 6.75% Notes due 2011
for cash. As of December 31, 2009, there was
$1.000 billion aggregate principal amount of such notes
outstanding. The closing of the offering of securities
contemplated by this prospectus supplement is not conditioned on
the consummation of the Tender Offer, and the closing of the
Tender Offer is not conditioned on the consummation of the
offering of securities contemplated by this prospectus
supplement.
S-5
DESCRIPTION
OF THE NOTES AND THE DEBENTURES
We will issue two separate series of securities under the
indenture referred to in the accompanying prospectus. The
following description of the securities offered hereby and the
related guarantees supplements the description of the general
terms and provisions of the securities set forth under
Description of the Debt Securities and the
Guarantees beginning on page 8 in the accompanying
prospectus. This description replaces the description of the
securities in the accompanying prospectus, to the extent of any
inconsistency.
Principal
Amount; Maturity and Interest
We will issue in this offering
$ in
aggregate principal amount of
our % Notes due 2020 and
$ in
aggregate principal amount of
our % Debentures due 2040. The
notes will mature on March , 2020 and the
debentures will mature on March , 2040.
We will pay interest on the notes at the rate
of % per year semi-annually in
arrears on March and
September of each year, beginning on
September , 2010, to holders of record on the
preceding March and
September , respectively. We will pay interest
on the debentures at the rate of %
per year semi-annually in arrears on March and
September of each year, beginning on
September , 2010, to holders of record on the
preceding March and
September , respectively. If interest or
principal on the notes or debentures is payable on a Saturday,
Sunday or any other day when banks are not open for business in
the City of New York, we will make the payment on the next
business day, and no interest will accrue as a result of the
delay in payment. Interest on the notes and debentures will
accrue from March , 2010, and will accrue on
the basis of a
360-day year
consisting of twelve
30-day
months.
In addition, we have the ability under the indenture to reopen
the series of notes offered hereby and issue additional notes as
part of the same series. The notes and any such additional notes
will be treated as a single series for all purposes under the
indenture, including waivers, amendments and redemptions. We
also have the ability under the indenture to reopen the series
of debentures offered hereby and issue additional debentures as
part of the same series. The debentures and any such additional
debentures will be treated as a single series for all purposes
under the indenture, including waivers, amendments and
redemptions.
Additional
Information
See Description of the Debt Securities and the
Guarantees in the accompanying prospectus for additional
important information about, and applicable to, the securities.
That information includes:
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additional information about the terms of the securities;
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general information about the indenture and the Trustee;
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a description of certain covenants under the indenture; and
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a description of events of default under the indenture.
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Guarantees
Historic TW, as primary obligor and not merely as surety, will
fully, irrevocably and unconditionally guarantee to each holder
of the securities and to the Trustee and its successors and
assigns, (1) the full and punctual payment of principal and
interest on the securities when due, whether at maturity, by
acceleration, by redemption or otherwise, and all other monetary
obligations of ours under the indenture (including obligations
to the Trustee) and the securities and (2) the full and
punctual performance within applicable grace periods of all
other obligations of ours under the indenture and the
securities. Such guarantees will constitute guarantees of
payment, performance and compliance and not merely of
collection. Additionally, HBO and TBS will fully, irrevocably
and unconditionally guarantee Historic TWs guarantee of
the securities under substantially the same terms as the
guarantee of Historic TW of the securities.
We describe the terms of the guarantees in more detail under the
heading Description of the Debt Securities and the
Guarantees Guarantees in the accompanying
prospectus.
S-6
Existing
Indebtedness
At December 31, 2009, the aggregate principal amount of
outstanding public debt securities of Time Warner and its
subsidiaries was $15.331 billion. The following is a
summary of the existing public debt at Time Warner and the
Guarantors, the revolving credit facility at Time Warner and the
guarantee of the AOL Inc. (AOL) revolving credit
facility and credit support provided to AOL. Please see the
information incorporated herein by reference for a further
description of this indebtedness as well as our and our
subsidiaries other indebtedness.
Time
Warner
At December 31, 2009, the aggregate principal amount
outstanding of public debt securities issued by Time Warner was
$10.000 billion. Time Warner has a $6.9 billion senior
unsecured five-year revolving credit facility that matures on
February 17, 2011. At December 31, 2009, there were no
borrowings under the revolving credit facility, there was
$82 million in outstanding face amount of letters of credit
issued under the revolving credit facility and no commercial
paper was outstanding under the commercial paper program.
Commercial paper issued by Time Warner is supported by unsecured
committed capacity under the revolving credit facility.
In connection with the legal and structural separation of AOL
from Time Warner (the AOL Separation), Time Warner
agreed to guarantee AOLs obligations with respect to loans
and letters of credit under AOLs $250 million
364-day
secured revolving credit facility entered into on
December 9, 2009. Also in connection with the AOL
Separation, Time Warner agreed to continue to provide credit
support for certain AOL lease and trade obligations of
approximately $108 million for a period ending on the
earlier of December 9, 2011 and 30 days after AOL
obtains the right to borrow funds under a permanent credit
facility, in exchange for a fee equal to a rate per annum of
4.375% of the outstanding principal amount of such obligations,
subject to periodic increases. Since the AOL Separation, AOL has
replaced and released Time Warner as a source of credit support
for certain AOL lease and trade obligations or otherwise reduced
Time Warners credit support obligations. As of
February 17, 2010, the amount of credit support for AOL
lease and trade obligations had been reduced to $28 million.
Guarantors
At December 31, 2009, the aggregate principal amount of
outstanding public debt securities issued or assumed by Historic
TW and TBS was $5.031 billion and $300 million,
respectively. HBO has not issued any public debt securities. At
December 31, 2009, Historic TW was the primary obligor or
guarantor of $15.331 billion of outstanding indebtedness
(representing all of the public debt securities of Time Warner
and its subsidiaries), HBO was a primary obligor or guarantor of
$12.402 billion of outstanding indebtedness (which includes
$12.331 billion of the $15.331 billion of public debt
securities issued by Time Warner and its subsidiaries) and TBS
was the primary obligor or guarantor of $15.361 billion of
outstanding indebtedness (which includes the
$15.331 billion of public debt securities issued by Time
Warner and its subsidiaries).
Other
The aggregate principal amount of existing indebtedness for
borrowed money, exclusive of intercompany debt and liabilities
and accounts payable, incurred by subsidiaries other than the
Guarantors was $90.9 million at December 31, 2009.
Release
of Guarantors
The indenture for the securities provides that any Guarantor may
be automatically released from its obligations if such Guarantor
has no outstanding Indebtedness For Borrowed Money (as defined
in the accompanying prospectus), other than any other guarantee
of Indebtedness For Borrowed Money that will be released
concurrently with the release of such guarantee. However, there
is no covenant in the indenture that would prohibit any such
Guarantor from incurring Indebtedness For Borrowed Money after
the date such Guarantor is released from its guarantee. In
addition, although the indenture for the securities limits the
overall
S-7
amount of secured Indebtedness For Borrowed Money that can be
incurred by Time Warner and its subsidiaries without also
securing the securities, it does not limit the amount of
unsecured indebtedness that can be incurred by Time Warner and
its subsidiaries. Thus, there is no limitation on the amount of
indebtedness that could be structurally senior to the
securities. See Description of the Debt Securities and the
Guarantees Guarantees in the accompanying
prospectus.
Ranking
The securities offered hereby will be senior unsecured
obligations of ours, and will rank equally with other senior
unsecured obligations of ours. The guarantees of the securities
will be senior unsecured obligations of Historic TW, HBO and
TBS, as applicable, and will rank equally with all other senior
unsecured obligations of Historic TW, HBO and TBS, respectively.
The guarantee structure of the securities is substantially the
same as the guarantee structure for Time Warners
outstanding public debt securities, except that (i) the
securities will not be guaranteed by Historic AOL LLC (formerly
AOL LLC) (which currently conducts no operations and has limited
assets), which is an indirect guarantor of $12.331 billion
of the $15.331 billion aggregate principal amount of
outstanding public debt securities issued by Time Warner and its
subsidiaries, and (ii) the securities will be guaranteed by
HBO, which, as of December 31, 2009, is an indirect
guarantor of $12.331 billion of the $15.331 billion
aggregate principal amount of outstanding public debt securities
issued by Time Warner and its subsidiaries.
Each of Time Warner, Historic TW, HBO and TBS is a holding
company for other non-guarantor subsidiaries, and therefore the
securities and the guarantees of the securities will be
effectively subordinated to all existing and future liabilities,
including indebtedness, of such non-guarantor subsidiaries. Such
non-guarantor subsidiaries, in addition to Historic AOL LLC,
include Warner Bros. Entertainment Inc. and Time Inc.
Furthermore, the ability of each of Time Warner, Historic TW
and, to a certain extent, HBO and TBS, to service its
indebtedness and other obligations depends on the earnings and
cash flow of their respective subsidiaries and the distribution
or other payment to them of such earnings or cash flow.
Optional
Redemption
We may redeem some or all of the securities at any time or from
time to time, as a whole or in part, at our option, on at least
15 days, but not more than 45 days, prior notice
mailed to each holder of such securities to be redeemed, at
respective redemption prices equal to the greater of:
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100% of the principal amount of the securities to be
redeemed, and
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the sum of the present values of the Remaining Scheduled
Payments, as defined in the accompanying prospectus, discounted
to the redemption date, on a semi-annual basis, assuming a
360-day year
consisting of twelve
30-day
months, at the Treasury Rate, as defined in the accompanying
prospectus,
plus basis
points, in the case of the redemption of any notes, and
plus basis
points, in the case of the redemption of any debentures;
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plus, in each case, accrued interest to, but not including, the
date of redemption that has not been paid.
No
Mandatory Redemption or Sinking Fund
There will be no mandatory redemption prior to maturity or
sinking fund payment for the securities.
Additional
Debt
The indenture does not limit the amount of debt that we may
issue under the indenture or otherwise.
Book-Entry
Delivery and Settlement
Global
Notes
We will issue the securities of each series in the form of one
or more global notes in definitive, fully registered, book-entry
form. The global notes will be deposited with or on behalf of
The Depository
S-8
Trust Company (DTC) and registered in the name
of Cede & Co., as nominee of DTC, or will remain in
the custody of the Trustee in accordance with the FAST Balance
Certificate Agreement between DTC and the Trustee.
DTC,
Clearstream and Euroclear
Beneficial interests in the global notes will be represented
through book-entry accounts of financial institutions acting on
behalf of beneficial owners as direct and indirect participants
in DTC. Investors may hold interests in the global notes through
either DTC (in the United States), Clearstream Banking,
société anonyme, Luxembourg
(Clearstream), or Euroclear Bank S.A./N.V., as
operator of the Euroclear System (Euroclear) in
Europe, either directly if they are participants of such systems
or indirectly through organizations that are participants in
such systems. Clearstream and Euroclear will hold interests on
behalf of their participants through customers securities
accounts in Clearstreams and Euroclears names on the
books of their U.S. depositaries, which in turn will hold
such interests in customers securities accounts in the
U.S. depositaries names on the books of DTC. The Bank
of New York Mellon will act as the U.S. depositary for
Clearstream and Euroclear.
DTC has advised us as follows:
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DTC is a limited-purpose trust company organized under the New
York Banking Law, a banking organization within the
meaning of the New York Banking Law, a member of the Federal
Reserve System, a clearing corporation within the
meaning of the New York Uniform Commercial Code and a
clearing agency registered under Section 17A of
the Securities Exchange Act of 1934, as amended (the
Exchange Act).
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DTC holds securities that its participants deposit with DTC and
facilitates the settlement among participants of securities
transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in
participants accounts, thereby eliminating the need for
physical movement of securities certificates.
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Direct participants include securities brokers and dealers,
banks, trust companies, clearing corporations and other
organizations.
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DTC is owned by a number of its direct participants and by The
New York Stock Exchange, Inc., the American Stock Exchange LLC
and the Financial Industry Regulatory Authority.
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Access to the DTC system is also available to others such as
securities brokers and dealers, banks and trust companies that
clear through or maintain a custodial relationship with a direct
participant, either directly or indirectly.
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The rules applicable to DTC and its direct and indirect
participants are on file with the SEC.
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Clearstream has advised us that it is incorporated under the
laws of Luxembourg as a professional depositary. Clearstream
holds securities for its customers and facilitates the clearance
and settlement of securities transactions between its customers
through electronic book-entry changes in accounts of its
customers, thereby eliminating the need for physical movement of
certificates. Clearstream provides to its customers, among other
things, services for safekeeping, administration, clearance and
settlement of internationally traded securities and securities
lending and borrowing. Clearstream interfaces with domestic
markets in several countries. As a professional depositary,
Clearstream is subject to regulation by the Luxembourg
Commission for the Supervision of the Financial Section.
Clearstream customers are recognized financial institutions
around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and other
organizations and may include the underwriters. Indirect access
to Clearstream is also available to others, such as banks,
brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Clearstream customer,
either directly or indirectly.
Euroclear has advised us that it was created in 1968 to hold
securities for participants of Euroclear and to clear and settle
transactions between Euroclear participants through simultaneous
electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of certificates and
any risk from lack of simultaneous transfers of securities and
cash. Euroclear provides various other services, including
S-9
securities lending and borrowing and interfaces with domestic
markets in several countries. Euroclear is operated by Euroclear
Bank S.A./N.V. (the Euroclear Operator) under
contract with Euroclear Clearance Systems S.C., a Belgian
cooperative corporation (the Cooperative). All
operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear Operator, not the
Cooperative. The Cooperative establishes policy for Euroclear on
behalf of Euroclear participants. Euroclear participants include
banks (including central banks), securities brokers and dealers
and other professional financial intermediaries and may include
the underwriters. Indirect access to Euroclear is also available
to other firms that clear through or maintain a custodial
relationship with a Euroclear participant, either directly or
indirectly.
The Euroclear Operator has advised us that it is licensed by the
Belgian Banking and Finance Commission to carry out banking
activities on a global basis. As a Belgian bank, it is regulated
and examined by the Belgian Banking and Finance Commission.
We have provided the descriptions of the operations and
procedures of DTC, Clearstream and Euroclear in this prospectus
supplement solely as a matter of convenience. These operations
and procedures are solely within the control of those
organizations and are subject to change by them from time to
time. None of our company, Historic TW, HBO, TBS, the
underwriters or the Trustee takes any responsibility for these
operations or procedures, and you are urged to contact DTC,
Clearstream and Euroclear or their participants directly to
discuss these matters.
We expect that under procedures established by DTC:
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upon deposit of the global notes with DTC or its custodian, DTC
will credit on its internal system the accounts of direct
participants designated by the underwriters with portions of the
principal amounts of the global notes; and
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ownership of the securities will be shown on, and the transfer
of ownership thereof will be effected only through, records
maintained by DTC or its nominee, with respect to interests of
direct participants, and the records of direct and indirect
participants, with respect to interests of persons other than
participants.
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The laws of some jurisdictions may require that purchasers of
securities take physical delivery of those securities in
definitive form. Accordingly, the ability to transfer interests
in the securities represented by global notes to those persons
may be limited. In addition, because DTC can act only on behalf
of its participants, who in turn act on behalf of persons who
hold interests through participants, the ability of a person
having an interest in securities represented by global notes to
pledge or transfer those interests to persons or entities that
do not participate in DTCs system, or otherwise to take
actions in respect of such interest, may be affected by the lack
of a physical definitive security in respect of such interest.
So long as DTC or its nominee is the registered owner of the
global notes, DTC or that nominee will be considered the sole
owner or holder of the securities represented by the global
notes for all purposes under the indenture and under the
securities. Except as provided below, owners of beneficial
interests in a global note will not be entitled to have
securities represented by that global note registered in their
names, will not receive or be entitled to receive physical
delivery of certificated securities and will not be considered
the owners or holders thereof under the indenture or under the
securities for any purpose, including with respect to the giving
of any direction, instruction or approval to the Trustee.
Accordingly, each holder owning a beneficial interest in a
global note must rely on the procedures of DTC and, if that
holder is not a direct or indirect participant, on the
procedures of the participant through which that holder owns its
interest, to exercise any rights of a holder of securities under
the indenture or a global note.
None of our company, Historic TW, HBO, TBS or the Trustee will
have any responsibility or liability for any aspect of the
records relating to or payments made on account of the
securities by DTC, Clearstream or Euroclear, or for maintaining,
supervising or reviewing any records of those organizations
relating to the securities.
S-10
Payments on the securities represented by the global notes will
be made to DTC or its nominee, as the case may be, as the
registered owner thereof. We expect that DTC or its nominee,
upon receipt of any payment on the securities represented by a
global note, will credit participants accounts with
payments in amounts proportionate to their respective beneficial
interests in the global note as shown in the records of DTC or
its nominee. We also expect that payments by participants to
owners of beneficial interests in the global note held through
such participants will be governed by standing instructions and
customary practice as is now the case with securities held for
the accounts of customers registered in the names of nominees
for such customers. The participants will be responsible for
those payments.
Distributions on the securities held beneficially through
Clearstream will be credited to cash accounts of its customers
in accordance with its rules and procedures, to the extent
received by the U.S. depositary for Clearstream.
Securities clearance accounts and cash accounts with the
Euroclear Operator are governed by the Terms and Conditions
Governing Use of Euroclear and the related Operating Procedures
of the Euroclear System, and applicable Belgian law
(collectively, the Terms and Conditions). The Terms
and Conditions govern transfers of securities and cash within
Euroclear, withdrawals of securities and cash from Euroclear,
and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible
basis without attribution of specific certificates to specific
securities clearance accounts. The Euroclear Operator acts under
the Terms and Conditions only on behalf of Euroclear
participants and has no record of or relationship with persons
holding through Euroclear participants.
Distributions on the securities held beneficially through
Euroclear will be credited to the cash accounts of its
participants in accordance with the Terms and Conditions, to the
extent received by the U.S. depositary for Euroclear.
Clearance
and Settlement Procedures
Initial settlement for the securities will be made in
immediately available funds. Secondary market trading between
DTC participants will occur in the ordinary way in accordance
with DTC rules and will be settled in immediately available
funds. Secondary market trading between Clearstream customers
and/or
Euroclear participants will occur in the ordinary way in
accordance with the applicable rules and operating procedures of
Clearstream and Euroclear, as applicable, and will be settled
using the procedures applicable to conventional eurobonds in
immediately available funds.
Cross-market transfers between persons holding directly or
indirectly through DTC, on the one hand, and directly or
indirectly through Clearstream customers or Euroclear
participants, on the other, will be effected through DTC in
accordance with DTC rules on behalf of the relevant European
international clearing system by the U.S. depositary;
however, such cross-market transactions will require delivery of
instructions to the relevant European international clearing
system by the counterparty in such system in accordance with its
rules and procedures and within its established deadlines
(European time). The relevant European international clearing
system will, if the transaction meets its settlement
requirements, deliver instructions to the U.S. depositary
to take action to effect final settlement on its behalf by
delivering or receiving the securities in DTC, and making or
receiving payment in accordance with normal procedures for
same-day
funds settlement applicable to DTC. Clearstream customers and
Euroclear participants may not deliver instructions directly to
their U.S. depositaries.
Because of time-zone differences, credits of the securities
received in Clearstream or Euroclear as a result of a
transaction with a DTC participant will be made during
subsequent securities settlement processing and dated the
business day following the DTC settlement date. Such credits or
any transactions in the securities settled during such
processing will be reported to the relevant Clearstream
customers or Euroclear participants on such business day. Cash
received in Clearstream or Euroclear as a result of sales of the
securities by or through a Clearstream customer or a Euroclear
participant to a DTC participant will be received with value on
the DTC settlement date but will be available in the relevant
Clearstream or Euroclear cash account only as of the business
day following settlement in DTC.
S-11
Although DTC, Clearstream and Euroclear have agreed to the
foregoing procedures to facilitate transfers of the securities
among participants of DTC, Clearstream and Euroclear, they are
under no obligation to perform or continue to perform such
procedures and such procedures may be changed or discontinued at
any time.
Certificated
Securities
We will issue certificated securities to each person that DTC
identifies as the beneficial owner of the securities represented
by the global notes upon surrender by DTC of the global notes if:
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DTC notifies us that it is no longer willing or able to act as a
depositary for the global notes or ceases to be a clearing
agency registered under the Exchange Act, and we have not
appointed a successor depositary within 90 days of that
notice or becoming aware that DTC is no longer so registered;
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an event of default has occurred and is continuing, and DTC
requests the issuance of certificated securities; or
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we determine not to have the securities represented by global
notes.
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Neither we nor the Trustee will be liable for any delay by DTC,
its nominee or any direct or indirect participant in identifying
the beneficial owners of the related securities. We and the
Trustee may conclusively rely on, and will be protected in
relying on, instructions from DTC or its nominee for all
purposes, including with respect to the registration and
delivery, and the respective principal amounts, of the
certificated securities to be issued.
S-12
MATERIAL
U.S. FEDERAL INCOME TAX CONSEQUENCES
General
The following is a summary of the material U.S. Federal
income tax consequences of the ownership and disposition of the
securities. It is not a complete analysis of all the potential
tax considerations relating to the securities. This summary is
based upon the provisions of the Internal Revenue Code of 1986,
as amended (the Code), the Treasury regulations
promulgated under the Code, and currently effective
administrative rulings and judicial decisions, all relating to
the U.S. Federal income tax treatment of debt instruments.
These authorities may be changed, perhaps with retroactive
effect, so as to result in U.S. Federal income tax
consequences different from those set forth below.
This summary assumes that you purchased your outstanding
securities upon their initial issuance at their respective
initial offering prices and that you held your outstanding
securities, and you will hold your securities, as capital assets
for U.S. Federal income tax purposes. This summary does not
address the tax considerations arising under the laws of any
foreign, state or local jurisdiction. In addition, this
discussion does not address all tax considerations that may be
applicable to holders particular circumstances or to
holders that may be subject to special tax rules, such as, for
example:
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holders subject to the alternative minimum tax;
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banks, insurance companies, or other financial institutions;
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tax-exempt organizations;
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dealers in securities or commodities;
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expatriates;
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traders in securities that elect to use a mark-to-market method
of accounting for their securities holdings;
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U.S. Holders (as defined below) whose functional currency
is not the U.S. dollar;
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persons that will hold the securities as a position in a hedging
transaction, straddle, conversion transaction or other risk
reduction transaction;
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persons deemed to sell the securities under the constructive
sale provisions of the Code; or
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partnerships or other pass-through entities.
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If a partnership holds securities, the tax treatment of a
partner in the partnership will generally depend upon the status
of the partner and the activities of the partnership. If you are
a partner of a partnership that will hold securities, you should
consult your tax advisor regarding the tax consequences of
holding the securities to you.
This summary of material U.S. Federal income tax
considerations is for general information only and is not tax
advice. You are urged to consult your tax advisor with respect
to the application of U.S. Federal income tax laws to your
particular situation as well as any tax consequences arising
under the U.S. Federal estate or gift tax rules or under
the laws of any state, local, foreign or other taxing
jurisdiction or under any applicable tax treaty.
U.S.
Holders
This section applies to you if you are a
U.S. Holder. A U.S. Holder is
a beneficial owner of a note or a debenture that is, for
U.S. Federal income tax purposes:
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a citizen or resident of the United States;
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a corporation (or other entity treated as a corporation for
U.S. Federal income tax purposes) created or organized in
or under the laws of the United States or any political
subdivision of the United States; or
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S-13
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an estate or trust the income of which is subject to
U.S. Federal income taxation regardless of its source.
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Payments
of Interest
Stated interest on the securities will be taxable to you as
ordinary income at the time it is paid or accrued in accordance
with your method of accounting for U.S. Federal income tax
purposes.
Sale,
Exchange, Redemption or Other Disposition of
Securities
Upon the sale, exchange, redemption or other disposition of a
note or a debenture, you will recognize taxable gain or loss
equal to the difference between the amount realized on such
disposition (except to the extent any amount realized is
attributable to accrued but unpaid interest, which is treated as
interest as described above) and your adjusted tax basis in such
note or debenture. A U.S. Holders adjusted tax basis
in a note or a debenture generally will equal the cost of such
note or debenture to such holder.
Gain or loss recognized on the disposition of a note or a
debenture generally will be capital gain or loss, and will be
long-term capital gain or loss if, at the time of such
disposition, the U.S. Holders holding period for such
note or debenture is more than 12 months. Long-term capital
gains of non-corporate U.S. Holders are generally subject to a
reduced rate of taxation. The deductibility of capital losses by
U.S. Holders is subject to certain limitations.
Information
Reporting and Backup Withholding
In general, information reporting requirements will apply to
certain payments of principal, premium (if any) and interest on
and the proceeds of certain sales of the securities unless you
are an exempt recipient. Backup withholding (currently at a rate
of 28%) will apply to such payments if you fail to provide your
taxpayer identification number or certification of exempt status
or have been notified by the U.S. Internal Revenue Service
(IRS) that payments to you are subject to backup
withholding.
Any amounts withheld under the backup withholding rules will
generally be allowed as a refund or a credit against your
U.S. Federal income tax liability, provided that you
furnish the required information to the IRS on a timely basis.
Non-U.S.
Holders
This section applies to you if you are a
Non-U.S. Holder.
A
Non-U.S. Holder
is a beneficial owner of a note or a debenture that is not a
U.S. Holder or a partnership for U.S. Federal income
tax purposes.
Payments
of Interest
Generally, payments of principal and interest on the securities
will not be subject to U.S. withholding taxes, provided
that you meet one of the following requirements:
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You provide a completed IRS
Form W-8BEN
(or an acceptable substitute) to the bank, broker or other
intermediary through which you hold your securities. The
Form W-8BEN
contains your name, address and a statement that you are the
beneficial owner of the securities and that you are a
Non-U.S. Holder.
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You hold your securities directly through a qualified
intermediary, and the qualified intermediary has
sufficient information in its files indicating that you are a
Non-U.S. Holder.
A qualified intermediary is a bank, broker or other intermediary
that (1) is either a U.S. or
non-U.S. entity,
(2) is acting out of a
non-U.S. branch
or office and (3) has signed an agreement with the IRS
providing that it will administer all or part of the
U.S. tax withholding rules under specified procedures.
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You are entitled to an exemption from withholding tax on
interest under a tax treaty between the United States and your
country of residence. To claim this exemption, you must
generally complete Form
W-8BEN and
claim this exemption on the form. In some cases, you may instead
be permitted to
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S-14
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provide documentary evidence of your claim to the intermediary,
or a qualified intermediary may already have some or all of the
necessary evidence in its files.
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The interest income on the securities is effectively connected
with your conduct of a trade or business in the United States
(and, if a tax treaty applies, is attributable to a permanent
establishment or fixed base), and is not exempt from
U.S. Federal income tax under a tax treaty. To claim this
exemption, you must complete
Form W-8ECI.
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Even if you meet one of the above requirements, interest paid to
you will be subject to withholding tax (generally, at a 30%
rate) under any of the following circumstances:
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The withholding agent or an intermediary knows or has reason to
know that you are not entitled to an exemption from withholding
tax. Specific rules apply for this test.
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The IRS notifies the withholding agent that information that you
or an intermediary provided concerning your status is false.
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An intermediary through which you hold the securities fails to
comply with the procedures necessary to avoid withholding taxes
on the securities. In particular, an intermediary is generally
required to forward a copy of your
Form W-8BEN
(or other documentary information concerning your status) to the
withholding agent for the securities. However, if you hold your
securities through a qualified intermediary or if
there is a qualified intermediary in the chain of title between
yourself and the withholding agent for the
securities the qualified intermediary will not
generally forward this information to the withholding agent.
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You own 10% or more of the voting stock of Time Warner, are a
controlled foreign corporation with respect to Time
Warner, or are a bank making a loan in the ordinary course of
its business. In these cases, you will be exempt from
withholding taxes only if you are eligible for a treaty
exemption or if the interest income is effectively connected
with your conduct of a trade or business in the United States
(and, if a tax treaty applies, is attributable to a permanent
establishment or fixed base), as discussed above.
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Interest payments made to you will generally be reported to the
IRS and to you on
Form 1042-S.
However, this reporting does not apply to you if you hold your
securities directly through a qualified intermediary and the
applicable procedures are complied with.
The rules regarding withholding are complex and vary depending
on your individual situation. They are also subject to change.
We suggest that you consult with your own tax advisor regarding
the application of these specific rules.
Sale,
Exchange, Redemption or Other Disposition of
Securities
Upon the sale, exchange, redemption or other disposition of a
note or debenture, you will not be subject to U.S. Federal
income tax on any gain unless one of the following applies:
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The gain is connected with a trade or business that you conduct
in the United States (and, if a tax treaty applies, is
attributable to a permanent establishment or fixed base).
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You are an individual, you are present in the United States for
at least 183 days during the year in which you dispose of
the securities, and certain other conditions are satisfied. If
the foregoing conditions apply, you will be subject to
U.S. Federal income tax at a rate of 30% (or lower
applicable treaty rate) on any capital gain, which may be offset
by certain capital losses.
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The gain represents accrued but unpaid interest not previously
included in income, in which case the rules for interest would
apply.
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S-15
U.S.
Trade or Business
If you hold your securities in connection with a trade or
business that you are conducting in the United States (and, if a
tax treaty applies, income or gain with respect to the
securities is attributable to a permanent establishment or fixed
base):
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Any interest on the securities, and any gain from the sale,
exchange, redemption or other disposition of the securities,
generally will be subject to U.S. Federal income tax at
regular graduated rates as if you were a U.S. Holder.
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If you are a corporation, you may be subject to the branch
profits tax on your earnings from the securities. The rate
of this tax is 30%, but may be reduced or eliminated by an
applicable income tax treaty.
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Information
Reporting and Backup Withholding
U.S. rules concerning information reporting and backup
withholding (currently at a rate of 28%) apply to
Non-U.S. Holders
as follows:
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Principal and interest payments you receive will be
automatically exempt from the usual rules if you are a
Non-U.S. Holder
exempt from withholding tax on interest, as described above. The
exemption does not apply if the withholding agent or an
intermediary knows or has reason to know that you should be
subject to the usual information reporting or backup withholding
rules. In addition, as described above, interest payments made
to you may be reported to the IRS on
Form 1042-S.
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Sale proceeds you receive on a sale of your securities through a
broker may be subject to information reporting
and/or
backup withholding if you are not eligible for an exemption. In
particular, information reporting and backup withholding may
apply if you use the U.S. office of a broker, and
information reporting (but not backup withholding) may apply if
you use the foreign office of a broker that has certain
connections to the United States. In general, you may file
Form W-8BEN
to claim an exemption from information reporting and backup
withholding. We suggest that you consult your own tax advisor
concerning information reporting and backup withholding on a
sale.
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Any amounts withheld under the backup withholding rules will be
allowed as a refund or credit against your U.S. Federal
income tax liability, provided that you furnish the required
information to the IRS on a timely basis.
S-16
UNDERWRITING
Banc of America Securities LLC, Citigroup Global Markets Inc.,
Deutsche Bank Securities Inc. and Morgan Stanley & Co.
Incorporated are acting as the representatives of the
underwriters named below. Subject to the terms and conditions
stated in the underwriting agreement dated the date of this
prospectus supplement, each underwriter named below has agreed
to severally purchase, and we have agreed to sell to that
underwriter, the principal amount of securities set forth
opposite the underwriters name in the table below:
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Principal Amount
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Principal Amount
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Underwriter
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of The Notes
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of The Debentures
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Banc of America Securities LLC
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$
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$
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Citigroup Global Markets Inc.
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Deutsche Bank Securities Inc.
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Morgan Stanley & Co. Incorporated
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Total
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$
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$
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The underwriting agreement provides that the obligations of the
underwriters to purchase the securities included in this
offering are subject to approval of legal matters by counsel and
other conditions. The underwriters are obligated to purchase all
the securities if they purchase any of the securities. The
underwriters initially propose to offer some of the securities
directly to the public at the public offering price set forth on
the cover page of this prospectus supplement and some of the
securities to dealers at the public offering price less a
concession not to exceed %
and %, respectively, of the
principal amount of the notes and the debentures. The
underwriters may allow, and dealers may reallow, a concession
not to exceed %
and %, respectively, of the
principal amount of the notes and the debentures on sales to
other dealers. After the initial offering of the securities to
the public, the representatives may change the public offering
price and concessions.
We are to pay %
and %, respectively, per note and
debenture of underwriting discounts and commissions to the
underwriters in connection with this offering (expressed as a
percentage of the principal amount of the securities).
In connection with the offering of the securities, the
underwriters may engage in transactions that stabilize, maintain
or otherwise affect the price of the securities. Specifically,
the underwriters may over-allot in connection with the offering
of the securities, creating a syndicate short position. In
addition, the underwriters may bid for, and purchase, securities
in the open market to cover syndicate short positions or to
stabilize the price of the securities. Finally, the underwriting
syndicate may reclaim selling concessions allowed for
distributing the securities in the offering of the securities,
if the syndicate repurchases previously distributed securities
in syndicate covering transactions, stabilization transactions
or otherwise. Any of these activities may stabilize or maintain
the market price of the securities above independent market
levels. The underwriters are not required to engage in any of
these activities, and may end any of them at any time.
We estimate that our total expenses for this offering, excluding
underwriting discounts, will be $900,000.
We have agreed to indemnify the several underwriters against
certain liabilities, including liabilities under the Securities
Act of 1933, as amended, or to contribute to payments the
underwriters may be required to make because of any of those
liabilities.
The underwriters and their affiliates have, directly and
indirectly, provided various investment and commercial banking
services to us and our affiliates for which they received
customary fees and commissions. The underwriters and their
affiliates may, from time to time, engage in transactions with
and perform services for us in the ordinary course of their
business. Citigroup Global Markets Inc. is acting as a dealer
manager in connection with the Tender Offer, as described under
Summary Recent Developments.
It is expected that delivery of the securities will be made
against payment therefor on or about the closing date specified
on the cover page of this prospectus supplement, which will be
the sixth business day following the date of pricing of the
securities (this settlement cycle being referred to as
T+6). Under
Rule 15c6-1
of
S-17
the Exchange Act, trades in the secondary market generally are
required to settle in three business days, unless the parties to
any such trade expressly agree otherwise. Accordingly,
purchasers who wish to trade securities on the date of pricing
or the next two succeeding business days will be required, by
virtue of the fact that the securities initially will settle in
T+6, to specify an alternate settlement cycle at the time of any
such trade to prevent a failed settlement.
Offering
Restrictions
European Economic Area. In relation to
each Member State of the European Economic Area which has
implemented the Prospectus Directive (each, a Relevant
Member State), each underwriter has represented and agreed
that with effect from and including the date on which the
Prospectus Directive is implemented in that Relevant Member
State (the Relevant Implementation Date) it has not
made and will not make an offer of securities to the public in
that Relevant Member State prior to the publication of a
prospectus in relation to the securities which has been approved
by the competent authority in that Relevant Member State or,
where appropriate, approved in another Relevant Member State and
notified to the competent authority in the Relevant Member
State, all in accordance with the Prospectus Directive, except
that it may, with effect from and including the Relevant
Implementation Date, make an offer of securities to the public
in that Relevant Member State at any time:
(a) to legal entities which are authorized or regulated to
operate in the financial markets or, if not so authorized or
regulated, whose corporate purpose is solely to invest in
securities;
(b) to any legal entity which has two or more of
(1) an average of over 250 employees during the last
financial year; (2) a total balance sheet of more than
43,000,000 and (3) an annual net turnover of more
than 50,000,000, as shown in its last annual or
consolidated accounts; or
(c) in any other circumstances which do not require the
publication by the issuer of a prospectus pursuant to
Article 3 of the Prospectus Directive.
For the purposes of this provision, the expression an
offer of securities to the public in relation to any
securities in any Relevant Member State means the communication
in any form and by any means of sufficient information on the
terms of the offer and the securities to be offered so as to
enable an investor to decide to purchase or subscribe the
securities, as the same may be varied in that Member State by
any measure implementing the Prospectus Directive in that Member
State and the expression Prospectus Directive means Directive
2003/17/EC and includes any relevant implementing measure
in each Relevant Member State.
United Kingdom. Each underwriter has
represented and agreed that it and each of its affiliates:
(a) has only communicated or caused to be communicated and
will only communicate or cause to be communicated an invitation
or inducement to engage in investment activity (within the
meaning of section 21 of the Financial Services and Markets
Act 2000 (the FSMA)) to persons who have
professional experience in matters relating to investments
falling within Article 19(5) of the FSMA or in
circumstances in which section 21 of the FSMA does not
apply to the Company or the Guarantors; and
(b) has complied with, and will comply with, all applicable
provisions of FSMA with respect to anything done by it in
relation to the securities in, from or otherwise involving the
United Kingdom.
S-18
LEGAL
MATTERS
Certain legal matters in connection with the offered securities
will be passed upon for us, Historic TW, HBO and TBS by Cravath,
Swaine & Moore LLP, New York, New York.
Certain legal matters in connection with the offered securities
will be passed upon for the underwriters by Shearman &
Sterling LLP, New York, New York.
S-19
PROSPECTUS
Debt Securities
Preferred Stock
Common Stock
Warrants
This prospectus contains a general description of the securities
which we may offer for sale. The specific terms of the
securities will be contained in one or more supplements to this
prospectus. You should read this prospectus and any supplement
carefully before you invest.
The securities will be issued by Time Warner Inc. The debt
securities will be fully, irrevocably and unconditionally
guaranteed on an unsecured basis by Historic TW Inc.; and Home
Box Office, Inc. and Turner Broadcasting System, Inc. will
fully, irrevocably and unconditionally guarantee on an unsecured
basis Historic TW Inc.s guarantee of the debt securities.
See Description of the Debt Securities and the
Guarantees.
The common stock of Time Warner Inc. is listed on the New York
Stock Exchange under the trading symbol TWX.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Investing in our securities involves risks. See Risk
Factors on page 6 of this prospectus. You should
carefully review the risks and uncertainties described under the
heading Risk Factors contained in the applicable
prospectus supplement and any related free writing prospectus,
and under similar headings in the other documents that are
incorporated by reference into this prospectus.
The date of this prospectus is March 3, 2010.
TABLE OF
CONTENTS
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ABOUT
THIS PROSPECTUS
This prospectus is part of a registration statement on
Form S-3
that we filed with the U.S. Securities and Exchange
Commission, which we refer to in this prospectus as the
SEC, using the shelf registration
process. Under the shelf registration process, we may from time
to time sell the securities described in this prospectus in one
or more offerings.
The securities may be sold for U.S. dollars,
foreign-denominated currency or currency units. Amounts payable
with respect to any securities may be payable in
U.S. dollars or foreign-denominated currency or currency
units as specified in the prospectus supplement.
This prospectus provides you with a general description of the
securities that we may offer. Each time we offer securities, we
will provide you with a prospectus supplement containing
specific information about the terms of the offering and the
means of distribution. A prospectus supplement may include other
special considerations applicable to such offering of
securities. The prospectus supplement may also add, update or
change information contained in this prospectus. If there is any
inconsistency between the information in this prospectus and any
prospectus supplement, you should rely on the information in the
prospectus supplement. You should carefully read this prospectus
and any prospectus supplement together with the additional
information described under the heading Where You Can Find
More Information.
The prospectus supplement may also contain information about any
material U.S. Federal income tax considerations relating to
the securities covered by the prospectus supplement.
We may sell securities to underwriters who will sell the
securities to the public on terms fixed at the time of sale. In
addition, the securities may be sold by us directly or through
dealers or agents designated from time to time, which agents may
be affiliates of ours. If we, directly or through agents,
solicit offers to purchase the securities, we reserve the sole
right to accept and, together with our agents, to reject, in
whole or in part, any offer.
The prospectus supplement will also contain, with respect to the
securities being sold, the names of any underwriters, dealers or
agents, together with the terms of offering, the compensation of
any underwriters and the net proceeds to us.
In this prospectus, unless the context otherwise requires, the
terms Time Warner, we, our,
our company, the Company and
us refer to Time Warner Inc., a Delaware
corporation, whose shares of common stock are publicly traded on
the New York Stock Exchange under the symbol TWX,
and its subsidiaries.
This prospectus contains summaries of certain provisions
contained in some of the documents described herein. Please
refer to the actual documents for complete information. All of
the summaries are qualified in their entirety by the actual
documents. Copies of the documents referred to herein have been
filed, or will be filed or incorporated by reference as exhibits
to the registration statement of which this prospectus is a
part, and you may obtain copies of those documents as described
under Where You Can Find More Information.
WHERE YOU
CAN FIND MORE INFORMATION
Time Warner files annual, quarterly and current reports, proxy
statements and other information with the SEC. You may obtain
such SEC filings from the SECs website at
http://www.sec.gov.
You can also read and copy these materials at the SECs
public reference room at 100 F Street, N.E.,
Washington, D.C. 20549. You can obtain information about
the operation of the SECs public reference room by calling
the SEC at
1-800-SEC-0330.
You can also obtain information about Time Warner at the offices
of the New York Stock Exchange, 20 Broad Street, New York,
New York 10005. Historic TW Inc., Home Box Office, Inc. and
Turner Broadcasting System, Inc. do not file separate reports,
proxy statements or other information with the SEC under the
Securities Exchange Act of 1934, as amended, which we refer to
in this prospectus as the Exchange Act.
1
As permitted by SEC rules, this prospectus does not contain all
of the information we have included in the registration
statement and the accompanying exhibits and schedules we file
with the SEC. You may refer to the registration statement,
exhibits and schedules for more information about us and the
securities. The registration statement, exhibits and schedules
are available through the SECs website or at its public
reference room.
INCORPORATION
BY REFERENCE
The SEC allows us to incorporate by reference
information Time Warner has filed with it, which means that we
can disclose important information to you by referring you to
those documents. The information we incorporate by reference is
an important part of this prospectus, and later information that
Time Warner files with the SEC will automatically update and
supersede this information. The following documents have been
filed by us with the SEC and are incorporated by reference into
this prospectus:
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Annual report on
Form 10-K
for the year ended December 31, 2009 (filed
February 19, 2010) (the 2009
Form 10-K);
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Current report on
Form 8-K
dated January 27, 2010 (filed January 29,
2010); and
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Current report on
Form 8-K,
dated January 11, 2001 (filed January 12, 2001), and
amended on January 25, 2001, February 9, 2001 and
March 30, 2001, in which it is reported that our common
stock is deemed registered pursuant to
Rule 12g-3(c)
under the Exchange Act.
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All documents and reports that we file with the SEC (other than
any portion of such filings that are furnished under applicable
SEC rules rather than filed) under Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act from the date of this prospectus
until the termination of the offering under this prospectus
shall be deemed to be incorporated in this prospectus by
reference. The information contained on our website
(http://www.timewarner.com)
is not incorporated into this prospectus.
You may request a copy of these filings, other than an exhibit
to these filings unless we have specifically included or
incorporated that exhibit by reference into the filing, from the
SEC as described under Where You Can Find More
Information or, at no cost, by writing or telephoning Time
Warner at the following address:
Time Warner Inc.
Attn: Investor Relations
One Time Warner Center
New York, NY
10019-8016
Telephone: 1-866-INFO-TWX
You should rely only on the information contained or
incorporated by reference in this prospectus, the prospectus
supplement and any applicable free writing prospectus. We have
not authorized any person, including any salesman or broker, to
provide information other than that provided in this prospectus,
the prospectus supplement or any applicable free writing
prospectus. We have not authorized anyone to provide you with
different information. We are not making an offer of the
securities in any jurisdiction where the offer is not permitted.
You should assume that the information in this prospectus, the
prospectus supplement and any applicable free writing prospectus
is accurate only as of the date on its cover page and that any
information we have incorporated by reference is accurate only
as of the date of the document incorporated by reference.
Any statement contained in a document incorporated or deemed to
be incorporated by reference into this prospectus will be deemed
to be modified or superseded for purposes of this prospectus to
the extent that a statement contained in this prospectus or any
other subsequently filed document that is deemed to be
incorporated by reference into this prospectus modifies or
supersedes the statement. Any statement so modified or
superseded will not be deemed, except as so modified or
superseded, to constitute a part of this prospectus.
2
STATEMENTS
REGARDING FORWARD-LOOKING INFORMATION
The SEC encourages companies to disclose forward-looking
information so that investors can better understand a
companys future prospects and make informed investment
decisions. This prospectus contains such forward-looking
statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, which we refer to in this
prospectus as the Securities Act, and
Section 21E of the Exchange Act. These statements may be
made directly in this prospectus referring to us and they may
also be made a part of this prospectus by reference to other
documents filed with the SEC, which is known as
incorporation by reference.
Forward-looking statements often include words such as
anticipates, estimates,
expects, projects, intends,
plans, believes and words and terms of
similar substance in connection with discussions of future
operating or financial performance. All forward-looking
statements are based on managements current expectations
and assumptions regarding our business and performance, the
economy and other future conditions and forecasts of future
events, circumstances and results. As with any projection or
forecast, they are inherently susceptible to uncertainty and
changes in circumstances. The Companys actual results may
differ materially from those set forth in its forward-looking
statements. Important factors that could cause the
Companys actual results to differ materially from those in
its forward-looking statements include government regulation,
economic, strategic, political and social conditions and the
following factors:
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recent and future changes in technology, services and standards,
including, but not limited to, alternative methods for the
delivery and storage of digital media and the maturation of the
standard definition DVD format;
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changes in consumer behavior, including changes in spending or
saving behavior and changes in when, where and how they consume
digital media;
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changes in the Companys plans, initiatives and strategies,
and consumer acceptance thereof;
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changes in advertising expenditures due to, among other things,
the shift of advertising expenditures from traditional to online
media, pressure from public interest groups, changes in laws and
regulations and other societal, political, technological and
regulatory developments;
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competitive pressures, including as a result of audience
fragmentation;
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the popularity of the Companys content;
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piracy and the Companys ability to protect its content and
intellectual property rights;
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lower than expected valuations associated with the cash flows
and revenues at Time Warners segments, which could result
in Time Warners inability to realize the value of recorded
intangibles and goodwill at those segments;
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the Companys ability to deal effectively with an economic
slowdown or other economic or market difficulty;
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decreased liquidity in the capital markets, including any
reduction in the Companys ability to access the capital
markets for debt securities or obtain bank financings on
acceptable terms;
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the effects of any significant acquisitions, dispositions and
other similar transactions by the Company;
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the failure to meet earnings expectations;
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the adequacy of the Companys risk management framework;
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changes in applicable accounting policies;
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the impact of terrorist acts, hostilities, natural disasters and
pandemic viruses;
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changes in tax laws; and
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the other risks and uncertainties detailed in Part I,
Item 1A, Risk Factors in the 2009
Form 10-K,
incorporated by reference herein.
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Any forward-looking statements speak only as of the date on
which they are made. None of Time Warner, Historic TW Inc., Home
Box Office, Inc. or Turner Broadcasting System, Inc. is under
any obligation, and each expressly disclaims any obligation, to
update or alter any forward-looking statements, whether as a
result of new information, subsequent events or otherwise.
All subsequent forward-looking statements attributable to us,
Historic TW Inc., Home Box Office, Inc. or Turner Broadcasting
System, Inc. or any person acting on our or their behalf are
expressly qualified in their entirety by the cautionary
statements contained or referred to in this section.
4
THE
COMPANY
Time
Warner
Time Warner is a leading media and entertainment company. Time
Warner classifies its operations into three reportable segments:
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Networks, consisting principally of cable television networks
that provide programming;
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Filmed Entertainment, consisting principally of feature film,
television and home video production and distribution; and
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Publishing, consisting principally of magazine publishing.
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Time Warner is the issuer of the securities to be offered by
this prospectus. Time Warner is a holding company that derives
its operating income and cash flow from its investments in its
subsidiaries, which include the Guarantors. Its principal
executive office is located at One Time Warner Center, New York,
NY
10019-8016,
telephone
(212) 484-8000.
Guarantors
The debt securities to be offered pursuant to this prospectus
and any applicable prospectus supplement will be fully,
irrevocably and unconditionally guaranteed by Historic TW Inc.
(Historic TW). In addition, Home Box Office, Inc.
(HBO) and Turner Broadcasting System, Inc.
(TBS) will fully, irrevocably and unconditionally
guarantee the obligations of Historic TW under its guarantee
(Historic TW, HBO and TBS are referred to herein as the
Guarantors). See Description of the Debt
Securities and the Guarantees Guarantees.
The following is a brief description of the Guarantors:
Historic
TW Inc.
Historic TW is a wholly owned subsidiary of Time Warner.
Historic TW is a holding company with substantially the same
business interests as Time Warner. It derives its operating
income and cash flow from its investments in its subsidiaries,
which include HBO, TBS, Warner Bros. Entertainment Inc. and Time
Inc. The principal executive office of Historic TW is located at
One Time Warner Center, New York NY
10019-8016,
telephone
(212) 484-8000.
Home
Box Office, Inc.
HBO is a wholly owned indirect subsidiary of Historic TW. It
derives its operating income and cash flow from its own
operations and also from its subsidiaries and investments. The
primary activities of HBO and its subsidiaries include the
operation of the HBO and Cinemax premium
pay television services, with the HBO service ranking as the
most widely distributed premium pay television service in the
United States. The principal executive office of HBO is located
at 1100 Avenue of the Americas, New York, NY
10036-6712,
telephone
(212) 512-1000.
Turner
Broadcasting System, Inc.
TBS is a wholly owned indirect subsidiary of Time Warner. It
derives its operating income and cash flow from its own
operations and also from its subsidiaries and investments. The
primary activities of TBS and its subsidiaries include the
operation of cable networks in the United States and
internationally. The principal executive office of TBS is
located at One CNN Center, Atlanta, GA 30303, telephone
(404) 827-1700.
5
RISK
FACTORS
Investing in our securities involves risk. You should carefully
consider the specific risks discussed or incorporated by
reference in the applicable prospectus supplement, together with
all the other information contained in the prospectus supplement
or incorporated by reference in this prospectus. You should also
consider the risks and uncertainties discussed under the caption
Risk Factors included in the 2009
Form 10-K,
which is incorporated by reference in this prospectus, and which
may be amended, supplemented or superseded from time to time by
other reports we file with the SEC in the future.
RATIO OF
EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for Time Warner is set
forth below for the periods indicated. As we have no shares of
preferred stock outstanding as of the date of this prospectus,
no ratio of earnings to fixed charges and preferred dividends is
presented.
For purposes of computing the ratio of earnings to fixed
charges, earnings were calculated by adding:
(i) pretax income (loss) from continuing operations,
(ii) adjustments for equity earnings or losses of investee
companies, net of cash distributions, and
(iii) fixed charges which consist of interest expense,
capitalized interest and portions of rents representative of an
interest factor from both continuing and discontinued operations.
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Year
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Year
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Year
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Year
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Year
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Ended
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Ended
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Ended
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Ended
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Ended
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December 31,
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December 31,
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December 31,
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December 31,
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December 31,
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2009
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2008
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2007
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2006
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2005
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Ratio of earnings to fixed charges
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3.0
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(a)
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2.0
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2.4
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1.2x
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(a) |
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Time Warners earnings were insufficient to cover its fixed
charges by $4.368 billion for the year ended
December 31, 2008. Net loss from continuing operations
before income taxes and discontinued operations for 2008
includes $7.139 billion of noncash impairments related to
goodwill and identifiable intangible assets at the Publishing
segment. |
6
USE OF
PROCEEDS
We will use the net proceeds we receive from the sale of the
securities offered by this prospectus for general corporate
purposes, unless we specify otherwise in the applicable
prospectus supplement. General corporate purposes may include
additions to working capital, capital expenditures, repayment of
debt, the financing of possible acquisitions and investments or
stock repurchases.
7
DESCRIPTION
OF THE DEBT SECURITIES AND THE GUARANTEES
General
The following description of the terms of the debt securities
sets forth certain general terms and provisions of the debt
securities to which any prospectus supplement may relate. The
particular terms of any debt securities and the extent, if any,
to which such general provisions will not apply to such debt
securities will be described in the prospectus supplement
relating to such debt securities.
The debt securities will be issued from time to time in series
under an indenture among Time Warner, Historic TW, HBO, TBS and
The Bank of New York Mellon, as Trustee. The statements set
forth below are brief summaries of certain provisions contained
in the indenture, which summaries do not purport to be complete
and are qualified in their entirety by reference to the
indenture, a form of which is an exhibit to the registration
statement of which this prospectus is a part. Terms used herein
that are otherwise not defined shall have the meanings given to
them in the indenture. Such defined terms shall be incorporated
herein by reference.
The indenture does not limit the amount of debt securities which
may be issued thereunder and debt securities may be issued
thereunder up to the aggregate principal amount which may be
authorized from time to time by us. Any such limit applicable to
a particular series will be specified in the prospectus
supplement relating to that series.
The applicable prospectus supplement will disclose the terms of
each series of debt securities in respect of which such
prospectus supplement is being delivered, including the
following:
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the designation, issue date, currency or currency unit of
payment if other than U.S. dollars and authorized
denominations of such debt securities, if other than
U.S. $1,000 and integral multiples thereof;
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the aggregate principal amount offered and any limit on any
future issues of additional debt of the same series;
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the date or dates on which such debt securities will mature
(which may be fixed or extendible);
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the rate or rates (or manner of calculation thereof), if any,
per annum at which such debt securities will bear interest;
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the dates, if any, on which such interest will be payable;
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the terms of any mandatory or optional redemption (including any
sinking, purchase or analogous fund) and any purchase at the
option of Holders (including whether any such purchase may be
paid in cash, common stock or other securities or property);
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the terms of any mandatory or optional conversion or exchange
provisions;
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whether such debt securities will be issued in the form of
global securities and, if so, the identity of the depositary
with respect to such global securities; and
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any other specific terms.
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We may issue debt securities of any series at various times and
we may reopen any series for further issuances from time to time
without notice to existing Holders of securities of that series.
Some of the debt securities may be issued as original issue
discount debt securities. Original issue discount debt
securities bear no interest or bear interest at below-market
rates. These are sold at a discount below their stated principal
amount. If we issue these securities, the prospectus supplement
will describe any special tax, accounting or other information
which we think is important. We encourage you to consult with
your own competent tax and financial advisors on these important
matters.
8
Unless we specify otherwise in the applicable prospectus
supplement, the covenants contained in the indenture will not
provide special protection to Holders of debt securities if we
enter into a highly leveraged transaction, recapitalization or
restructuring.
Unless otherwise set forth in the prospectus supplement,
interest on outstanding debt securities will be paid to Holders
of record on the date that is 15 days prior to the date
such interest is to be paid, or, if not a business day, the next
preceding business day. Unless otherwise specified in the
prospectus supplement, debt securities will be issued in fully
registered form only. Unless otherwise specified in the
prospectus supplement, the principal amount of the debt
securities will be payable at the corporate trust office of the
Trustee in New York, New York. The debt securities may be
presented for transfer or exchange at such office unless
otherwise specified in the prospectus supplement, subject to the
limitations provided in the indenture, without any service
charge, but we may require payment of a sum sufficient to cover
any tax or other governmental charges payable in connection
therewith.
Guarantees
Under the Guarantee (as defined below) of Historic TW, Historic
TW, as primary obligor and not merely as surety, will fully,
irrevocably and unconditionally guarantee to each Holder of debt
securities and to the Trustee and its successors and assigns
(1) the full and punctual payment of principal of and
interest on the debt securities when due, whether at maturity,
by acceleration, by redemption or otherwise, and all other
monetary obligations of ours under the indenture (including
obligations to the Trustee) and the debt securities and
(2) the full and punctual performance within applicable
grace periods of all other obligations of ours under the
indenture and the debt securities. Such Guarantee will
constitute a guarantee of payment, performance and compliance
and not merely of collection. The obligations of Historic TW
under the indenture will be unconditional irrespective of the
absence or existence of any action to enforce the same, the
recovery of any judgment against us or each other or any waiver
or amendment of the provisions of the indenture or the debt
securities to the extent that any such action or similar action
would otherwise constitute a legal or equitable discharge or
defense of a guarantor (except that any such waiver or amendment
that expressly purports to modify or release such obligations
shall be effective in accordance with its terms). The
obligations of Historic TW to make any payments may be satisfied
by causing us to make such payments. Historic TW shall further
agree to waive presentment to, demand of payment from and
protest to us and shall also waive diligence, notice of
acceptance of its Guarantee, presentment, demand for payment,
notice of protest for non-payment, filing a claim if we complete
a merger or declare bankruptcy and any right to require a
proceeding first against us. These obligations shall be
unaffected by any failure or policy of the Trustee to exercise
any right under the indenture or under any series of security.
If any Holder of any debt security or the Trustee is required by
a court or otherwise to return to us or Historic TW, or any
custodian, trustee, liquidator or other similar official acting
in relation to us or Historic TW, any amount paid by us or any
of them to the Trustee or such Holder, the Guarantee of Historic
TW, to the extent theretofore discharged, shall be reinstated in
full force and effect.
Further, Historic TW agrees to pay any and all reasonable costs
and expenses (including reasonable attorneys fees)
incurred by the Trustee or any Holder of debt securities in
enforcing any of their respective rights under the Guarantee.
The indenture provides that the Guarantee of Historic TW is
limited to the maximum amount that can be guaranteed by Historic
TW without rendering its Guarantee voidable under applicable law
relating to fraudulent conveyance or fraudulent transfer or
similar laws affecting the rights of creditors generally.
Additionally, HBO and TBS will fully, irrevocably and
unconditionally guarantee Historic TWs Guarantee of the
debt securities under substantially the same terms as the
Guarantee of Historic TW of our indebtedness (the guarantees of
the Guarantors each being a Guarantee and,
collectively, the Guarantees).
The indenture provides that any Guarantor shall be automatically
released from its obligations under its Guarantee upon receipt
by the Trustee of a certificate of a Responsible Officer of Time
Warner certifying that such Guarantor has no outstanding
Indebtedness For Borrowed Money, as of the date of such
certificate, other than any other guarantee of Indebtedness For
Borrowed Money that will be released concurrently with the
release of such Guarantee. However, there is no covenant in the
indenture that would prohibit any such
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Guarantor from incurring Indebtedness For Borrowed Money after
the date such Guarantor is released from its Guarantee.
The indenture further provides that we and the Trustee may enter
into a supplemental indenture without consent of the Holders to
add additional guarantors in respect of the debt securities.
Ranking
The debt securities will be unsecured and senior obligations of
Time Warner, and will rank equally with other unsecured and
unsubordinated obligations of Time Warner. The Guarantees of the
debt securities will be unsecured and senior obligations of
Historic TW, HBO and TBS, as applicable, and will rank equally
with all other unsecured and unsubordinated obligations of
Historic TW, HBO and TBS, respectively. Each of Time Warner,
Historic TW, HBO and TBS is a holding company for other
non-guarantor subsidiaries, and therefore the debt securities
and the Guarantees will be effectively subordinated to all
existing and future liabilities, including indebtedness, of such
non-guarantor subsidiaries. Such non-guarantor subsidiaries
include Warner Bros. Entertainment Inc. and Time Inc.
Furthermore, the ability of each of Time Warner and Historic TW
and, to a certain extent, HBO and TBS to service its
indebtedness and other obligations is dependent upon the
earnings and cash flow of their respective subsidiaries and the
distribution or other payment to them of such earnings or cash
flow.
Certain
Covenants
We and Historic TW, HBO and TBS have agreed to certain
restrictions on our activities for the benefit of the Holders.
The restrictive covenants summarized below will apply, unless
the covenants are waived or amended, so long as any of the debt
securities issued under the indenture are outstanding, unless
the prospectus supplement states otherwise. The indenture does
not restrict us or our subsidiaries from paying dividends or
incurring additional debt. In addition, except as summarized
below, the indenture and the debt securities do not contain any
covenants or other provisions designed to afford Holders of debt
securities protection in the event of a recapitalization or
highly leveraged transaction involving our company.
Any additional restrictive covenants of Time Warner, Historic
TW, HBO or TBS pertaining to a series of debt securities will be
set forth in a prospectus supplement relating to such series of
debt securities.
Limitation on Liens. The indenture provides
that neither we nor any Material Subsidiary of ours shall incur,
create, issue, assume, guarantee or otherwise become liable for
any Indebtedness For Borrowed Money that is secured by a lien on
any asset now owned or hereafter acquired by us or it unless we
make or cause to be made effective provisions whereby the debt
securities will be secured by such lien equally and ratably with
(or prior to) all other indebtedness thereby secured so long as
any such indebtedness shall be secured. The foregoing
restriction does not apply to the following:
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liens existing as of the date of the indenture;
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liens created by Subsidiaries of ours to secure indebtedness of
such Subsidiaries to us or to one or more other Subsidiaries of
ours;
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liens affecting property of a Person existing at the time it
becomes a Subsidiary of ours or at the time it merges into or
consolidates with us or a Subsidiary of ours or at the time of a
sale, lease or other disposition of all or substantially all of
the properties of such Person to us or our Subsidiaries;
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liens on property existing at the time of the acquisition
thereof or incurred to secure payment of all or a part of the
purchase price thereof or to secure indebtedness incurred prior
to, at the time of, or within 18 months after the
acquisition thereof for the purpose of financing all or part of
the purchase price thereof, in a principal amount not exceeding
110% of the purchase price;
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liens on any property to secure all or part of the cost of
improvements or construction thereon or indebtedness incurred to
provide funds for such purpose in a principal amount not
exceeding 110% of the cost of such improvements or construction;
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liens consisting of or relating to the sale, transfer,
distribution, or financing of motion pictures, video and
television programs, sound recordings, books or rights with
respect thereto or with groups who may receive tax benefits or
other third-party investors in connection with the financing
and/or
distribution of such motion pictures, video and television
programming, sound recordings or books in the ordinary course of
business and the granting to us or any of our Subsidiaries of
rights to distribute such motion pictures, video and television
programming, sound recordings or books; provided,
however, that no such lien shall attach to any asset or
right of ours or our Subsidiaries (other than (1) the
motion pictures, video and television programming, sound
recordings, books or rights which were sold, transferred to or
financed by groups who may receive tax benefits or third-party
investors in question or the proceeds arising therefrom and
(2) the stock or equity interests of a Subsidiary
substantially all of the assets of which consist of such motion
pictures, video and television programming, sound recordings,
books or rights and related proceeds);
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liens on shares of stock, indebtedness or other securities of a
Person that is not a Subsidiary of ours;
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liens on Works which either (1) existed in such Works
before the time of their acquisition and were not created in
anticipation thereof, or (2) were created solely for the
purpose of securing obligations to financiers, producers,
distributors, exhibitors, completion guarantors, inventors,
copyright holders, financial institutions or other participants
incurred in the ordinary course of business in connection with
the acquisition, financing, production, completion, distribution
or exhibition of Works;
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any lien on the office building and hotel complex located in
Atlanta, Georgia known as the CNN Center Complex, including the
parking decks for such complex (to the extent such parking decks
are owned or leased by us or our Subsidiaries), or any portion
thereof and all property rights therein and the products,
revenues and proceeds therefrom created as part of any mortgage
financing or sale-leaseback of the CNN Center Complex;
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liens on satellite transponders and all property rights therein
and the products, revenues and proceeds therefrom which secure
obligations incurred in connection with the acquisition,
utilization or operation of such satellite transponders or the
refinancing of any such obligations;
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liens on capital leases entered into after the date of the
indenture; provided that such liens extend only to the
property or assets that are the subject of such capital leases;
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liens resulting from progress payments or partial payments under
United States government contracts or subcontracts;
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any extensions, renewal or replacement of any lien referred to
in the foregoing clauses or of any indebtedness secured thereby;
provided, however, that the principal amount of
indebtedness secured thereby shall not exceed the principal
amount of indebtedness so secured at the time of such extension,
renewal or replacement, or at the time the lien was issued,
created or assumed or otherwise permitted, and that such
extension, renewal or replacement lien shall be limited to all
or part of substantially the same property which secured the
lien extended, renewed or replaced (plus improvements on such
property); and
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other liens arising in connection with our indebtedness and our
Subsidiaries indebtedness in an aggregate principal amount
for us and our Subsidiaries not exceeding at the time such lien
is issued, created or assumed the greater of (A) 15% of the
Consolidated Net Worth of our company and
(B) $500 million.
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Limitation on Consolidation, Merger, Conveyance or Transfer
on Certain Terms. None of Time Warner, Historic
TW, HBO or TBS shall consolidate with or merge into any other
Person or convey or transfer its properties and assets
substantially as an entirety to any Person, unless:
(1) (a) in the case of Time Warner, the Person formed
by such consolidation or into which Time Warner is merged or the
Person which acquires by conveyance or transfer the properties
and assets of Time Warner substantially as an entirety shall be
organized and existing under the laws of the United States of
America or any State thereof or the District of Columbia, and
shall expressly assume, by
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supplemental indenture, executed and delivered to the Trustee,
in form satisfactory to the Trustee, the due and punctual
payment of the principal of (and premium, if any) and interest
on all the debt securities and the performance of every covenant
of the indenture (as supplemented from time to time) on the part
of Time Warner to be performed or observed; (b) in the case
of Historic TW, HBO or TBS, the Person formed by such
consolidation or into which Historic TW, HBO or TBS is merged or
the Person which acquires by conveyance or transfer the
properties and assets of Historic TW, HBO or TBS substantially
as an entirety shall be either (i) one of Time Warner,
Historic TW, HBO or TBS or (ii) a Person organized and
existing under the laws of the United States of America or any
State thereof or the District of Columbia, and in the case of
clause (ii), shall expressly assume, by supplemental indenture,
executed and delivered to the Trustee, in form satisfactory to
the Trustee, the performance of every covenant of the indenture
(as supplemented from time to time) on the part of Historic TW,
HBO or TBS to be performed or observed;
(2) immediately after giving effect to such transaction, no
Event of Default, and no event which, after notice or lapse of
time, or both, would become an Event of Default, shall have
happened and be continuing; and
(3) we have delivered to the Trustee an Officers
Certificate and an Opinion of Counsel each stating that such
consolidation, merger, conveyance or transfer and such
supplemental indenture comply with this covenant and that all
conditions precedent provided for in the indenture relating to
such transaction have been complied with.
Upon any consolidation or merger, or any conveyance or transfer
of the properties and assets of Time Warner, Historic TW, HBO or
TBS substantially as an entirety as set forth above, the
successor Person formed by such consolidation or into which Time
Warner, Historic TW, HBO or TBS is merged or to which such
conveyance or transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of Time
Warner, Historic TW, HBO or TBS, as the case may be, under the
indenture with the same effect as if such successor had been
named as Time Warner, Historic TW, HBO or TBS, as the case may
be, in the indenture. In the event of any such conveyance or
transfer, Time Warner, Historic TW, HBO or TBS, as the case may
be, as the predecessor shall be discharged from all obligations
and covenants under the indenture and the debt securities and
may be dissolved, wound up or liquidated at any time thereafter.
Notwithstanding the foregoing, such provisions with respect to
limitations on consolidation, merger, conveyance or transfer on
certain terms shall not apply to any Guarantor if at such time
such Guarantor has been released from its obligations under its
Guarantee upon receipt by the Trustee of a certificate of a
Responsible Officer of Time Warner certifying that such
Guarantor has no outstanding Indebtedness For Borrowed Money as
described above under Description of the Debt Securities
and the Guarantees Guarantees.
Certain
Definitions
The following are certain of the terms defined in the indenture:
Consolidated Net Worth means, with respect to
any Person, at the date of any determination, the consolidated
stockholders or owners equity of the holders of
capital stock or partnership interests of such Person and its
subsidiaries, determined on a consolidated basis in accordance
with GAAP consistently applied.
GAAP means generally accepted accounting
principles as such principles are in effect in the United States
as of the date of the indenture.
Holder, when used with respect to any
security, means a securityholder, which means a Person in whose
name a security is registered in the Security Register.
Indebtedness For Borrowed Money of any Person
means, without duplication, (a) all obligations of such
Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar
instruments and (c) all guarantee obligations of such
Person with respect to Indebtedness For Borrowed Money of
others. The Indebtedness For Borrowed Money of any Person shall
include the Indebtedness For
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Borrowed Money of any other entity (including any partnership in
which such Person is general partner) to the extent such Person
is liable therefor as a result of such Persons ownership
interest in or other contractual relationship with such entity,
except to the extent the terms of such Indebtedness For Borrowed
Money provide that such Person is not liable therefor.
Material Subsidiary means any Person that is
a Subsidiary if, at the end of the most recent fiscal quarter of
our company, the aggregate amount, determined in accordance with
GAAP consistently applied, of securities of, loans and advances
to, and other investments in, such Person held by us and our
other Subsidiaries exceeded 10% of our companys
Consolidated Net Worth.
Person means any individual, corporation,
limited liability company, partnership, joint venture,
association, joint-stock company, trust, unincorporated
organization or government or any agency or political
subdivision thereof.
Responsible Officer, when used with respect
to Time Warner, means any of the Chief Executive Officer,
President, Chief Operating Officer, Chief Financial Officer,
General Counsel, Treasurer, Controller or Vice President,
Corporate Finance, of Time Warner (or any equivalent of the
foregoing officers).
Security Register means the register or
registers we shall keep or cause to be kept, in which, we shall
provide for the registration of securities, or of securities of
a particular series, and of transfers of securities or of
securities of such series.
Subsidiary means, with respect to any Person,
any corporation more than 50% of the voting stock of which is
owned directly or indirectly by such Person, and any
partnership, association, joint venture or other entity in which
such Person owns more than 50% of the equity interests or has
the power to elect a majority of the board of directors or other
governing body.
Works means motion pictures, video,
television, interactive or multi-media programming, audio-visual
works, sound recordings, books and other literary or written
material, any software, copyright or other intellectual property
related thereto, acquired directly or indirectly after the date
of the indenture by purchase, business combination, production,
creation or otherwise, any component of the foregoing or rights
with respect thereto, and all improvements thereon, products and
proceeds thereof and revenues derived therefrom.
Optional
Redemption
Unless we specify otherwise in the applicable prospectus
supplement, we may redeem the debt securities at any time and
from time to time, as a whole or in part, at our option, on at
least 15 days, but not more than 45 days, prior notice
mailed to the registered address of each Holder of the debt
securities to be redeemed, at respective redemption prices equal
to the greater of:
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100% of the principal amount of the debt securities to be
redeemed, and
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the sum of the present values of the Remaining Scheduled
Payments, as defined below, discounted to the redemption date,
on a semi-annual basis, assuming a
360-day year
consisting of twelve
30-day
months, at the Treasury Rate, as defined below, plus the number,
if any, of basis points specified in the applicable prospectus
supplement;
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plus, in each case, accrued interest to the date of redemption
that has not been paid (such redemption price, the
Redemption Price).
Comparable Treasury Issue means, with respect
to the debt securities, the United States Treasury security
selected by an Independent Investment Banker as having a
maturity comparable to the remaining term (Remaining
Life) of the debt securities being redeemed that would be
utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate
debt securities of comparable maturity to the Remaining Life of
such debt securities.
Comparable Treasury Price means, with respect
to any redemption date for the debt securities: (1) the
average of four Reference Treasury Dealer Quotations for that
redemption date, after excluding the highest
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and lowest of such Reference Treasury Dealer Quotations; or
(2) if the Trustee obtains fewer than four Reference
Treasury Dealer Quotations, the average of all quotations
obtained by the Trustee.
Independent Investment Banker means one of
the Reference Treasury Dealers, to be appointed by us.
Reference Treasury Dealer means a primary
U.S. Government securities dealer.
Reference Treasury Dealer Quotations means,
with respect to each Reference Treasury Dealer and any
redemption date, the average, as determined by the Trustee, of
the bid and asked prices for the Comparable Treasury Issue,
expressed in each case as a percentage of its principal amount,
quoted in writing to the Trustee by such Reference Treasury
Dealer at 3:00 p.m., New York City time, on the third
business day preceding such redemption date.
Remaining Scheduled Payments means, with
respect to each security to be redeemed, the remaining scheduled
payments of the principal thereof and interest thereon that
would be due after the related redemption date but for such
redemption; provided, however, that, if such
redemption date is not an interest payment date with respect to
such security, the amount of the next succeeding scheduled
interest payment thereon will be deemed to be reduced by the
amount of interest accrued thereon to, but not including, such
redemption date.
Treasury Rate means, with respect to any
redemption date for the debt securities: (1) the yield,
under the heading which represents the average for the
immediately preceding week, appearing in the most recently
published statistical release designated H.15(519)
or any successor publication which is published weekly by the
Board of Governors of the Federal Reserve System and which
establishes yields on actively traded United States Treasury
debt securities adjusted to constant maturity under the caption
Treasury Constant Maturities, for the maturity
corresponding to the Comparable Treasury Issue; provided
that if no maturity is within three months before or after
the maturity date for the debt securities, yields for the two
published maturities most closely corresponding to the
Comparable Treasury Issue will be determined and the Treasury
Rate will be interpolated or extrapolated from those yields on a
straight line basis, rounding to the nearest month; or
(2) if that release, or any successor release, is not
published during the week preceding the calculation date or does
not contain such yields, the rate per annum equal to the
semiannual equivalent yield to maturity of the Comparable
Treasury Issue, calculated using a price for the Comparable
Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price for that
redemption date. The Treasury Rate will be calculated on the
third business day preceding the redemption date.
On and after the redemption date, interest will cease to accrue
on the debt securities or any portion thereof called for
redemption, unless we default in the payment of the
Redemption Price and accrued interest. On or before the
redemption date, we shall deposit with a paying agent, or the
Trustee, money sufficient to pay the Redemption Price of
and accrued interest on the debt securities to be redeemed on
such date. If we elect to redeem less than all of the debt
securities of a series, then the Trustee will select the
particular debt securities of such series to be redeemed in a
manner it deems appropriate and fair.
Defeasance
The indenture provides that we (and, to the extent applicable,
Historic TW, HBO and TBS), at our option,
(a) will be Discharged from any and all obligations in
respect of any series of debt securities (except in each case
for certain obligations to register the transfer or exchange of
debt securities, replace stolen, lost or mutilated debt
securities, maintain paying agencies and hold moneys for payment
in trust), or
(b) need not comply with the covenants described above
under Description of the Debt Securities and the
Guarantees Certain Covenants and any other
restrictive covenants described in a prospectus supplement
relating to such series of debt securities, the Guarantors will
be released from the Guarantees and certain Events of Default
(other than those arising out of the failure to pay interest or
principal on the debt securities of a particular series and
certain events of bankruptcy, insolvency and reorganization)
will no longer constitute Events of Default with respect to such
series of debt securities,
in each case if we deposit with the Trustee, in trust, money or
the equivalent in securities of the government which issued the
currency in which the debt securities are denominated or
government agencies backed by the
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full faith and credit of such government, or a combination
thereof, which through the payment of interest thereon and
principal thereof in accordance with their terms will provide
money in an amount sufficient to pay all the principal
(including any mandatory sinking fund payments) of and premiums
and interest on, and any repurchase or redemption obligations
with respect to the outstanding debt securities of, such series
on the dates such payments are due in accordance with the terms
of such series.
To exercise any such option, we are required, among other
things, to deliver to the Trustee an opinion of counsel to the
effect that (i) the deposit and related defeasance would
not cause the Holders of such series to recognize income, gain
or loss for Federal income tax purposes and, in the case of a
Discharge pursuant to clause (a), accompanied by a ruling to
such effect received from or published by the United States
Internal Revenue Service and (ii) the creation of the
defeasance trust will not violate the Investment Company Act of
1940, as amended.
In addition, we are required to deliver to the Trustee an
Officers Certificate stating that such deposit was not
made by us with the intent of preferring the Holders over other
creditors of ours or with the intent of defeating, hindering,
delaying or defrauding creditors of our company or others.
Events of
Default, Notice and Waiver
The indenture provides that, if an Event of Default specified
therein with respect to any series of debt securities issued
thereunder shall have happened and be continuing, either the
Trustee thereunder or the Holders of not less than 25% in
aggregate principal amount of the outstanding debt securities of
such series (or 25% in aggregate principal amount of all
outstanding debt securities under the indenture, in the case of
certain Events of Default affecting all series of debt
securities under the indenture) may declare the principal of all
the debt securities of such series to be due and payable.
Events of Default in respect of any series are defined in the
indenture as being:
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default for 30 days in payment of any interest installment
with respect to such series;
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default in payment of principal of, or premium, if any, on, or
any sinking fund or analogous obligation with respect to, debt
securities of such series when due at their stated maturity, by
declaration or acceleration, when called for redemption or
otherwise;
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default for 90 days after written notice to us (or Historic
TW, HBO or TBS, if applicable) by the Trustee thereunder or by
Holders of at least 25% in aggregate principal amount of the
outstanding debt securities of such series in the performance of
any covenant pertaining to debt securities of such series;
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certain events of bankruptcy, insolvency and reorganization with
respect to us or any Material Subsidiary thereof which is
organized under the laws of the United States or any political
subdivision thereof or the entry of an order ordering the
winding up or liquidation of our affairs; and
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any Guarantee ceasing to be, or asserted by any Guarantor as not
being, in full force and effect, enforceable according to its
terms, except to the extent contemplated by the indenture and
any such Guarantee.
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Any additions, deletions or other changes to the Events of
Default which will be applicable to a series of debt securities
will be described in the prospectus supplement relating to such
series of debt securities.
The indenture provides that the Trustee will, within
90 days after the occurrence of a default with respect to
the debt securities of any series, give to the Holders of the
debt securities of such series notice of all uncured and
unwaived defaults known to it; provided, however,
that, except in the case of default in the payment of principal
of, premium, if any, or interest, if any, on any of the debt
securities of such series, the Trustee thereunder will be
protected in withholding such notice if it in good faith
determines that the withholding of such notice is in the
interests of the Holders of the debt securities of such series.
The term default for the purpose of this provision
means any event which is, or after notice or lapse of time or
both would become, an Event of Default with respect to debt
securities of such series.
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The indenture contains provisions entitling the Trustee, subject
to the duty of the Trustee during an Event of Default to act
with the required standard of care, to be indemnified to its
reasonable satisfaction by the Holders of the debt securities
before proceeding to exercise any right or power under the
indenture at the request of Holders of the debt securities.
The indenture provides that the Holders of a majority in
aggregate principal amount of the outstanding debt securities of
any series may direct the time, method and place of conducting
proceedings for remedies available to the Trustee or exercising
any trust or power conferred on the Trustee in respect of such
series, subject to certain conditions set forth in the indenture.
In certain cases, the Holders of not less than a majority in
principal amount of the outstanding debt securities of any
series may waive, on behalf of the Holders of all debt
securities of such series, any past default or Event of Default
with respect to the debt securities of such series except, among
other things, a default not theretofore cured in payment of the
principal of, or premium, if any, or interest, if any, on any of
the debt securities of such series or payment of any sinking or
purchase fund or analogous obligations with respect to such debt
securities.
The indenture includes a covenant that we will file annually
with the Trustee a certificate of no default or specifying any
default that exists.
Modification
of the Indenture
We and the Trustee may, without the consent of the Holders of
the debt securities, enter into indentures supplemental to the
indenture for, among others, one or more of the following
purposes:
(1) to evidence the succession of another Person to Time
Warner, Historic TW, HBO or TBS and the assumption by such
successor of Time Warners, Historic TWs, HBOs
or TBSs obligations under the indenture and the debt
securities of any series or the Guarantees relating thereto;
(2) to add to the covenants of Time Warner, Historic TW,
HBO or TBS, or to surrender any rights or powers of Time Warner,
Historic TW, HBO or TBS, for the benefit of the Holders of debt
securities of any or all series;
(3) to cure any ambiguity or correct any inconsistency in
the indenture or to make any other provisions with respect to
matters or questions arising under the indenture;
(4) to add to the indenture any provisions that may be
expressly permitted by the Trust Indenture Act of 1939, as
amended, or the Act, excluding the provisions
referred to in Section 316(a)(2) of the Act as in effect at
the date as of which this instrument was executed or any
corresponding provision in any similar federal statute hereafter
enacted;
(5) to establish the form or terms of any series of debt
securities, to provide for the issuance of any series of debt
securities
and/or to
add to the rights of the Holders of debt securities;
(6) to evidence and provide for the acceptance of any
successor Trustee with respect to one or more series of debt
securities or to add or change any of the provisions of the
indenture as shall be necessary to facilitate the administration
of the trusts thereunder by one or more trustees in accordance
with the indenture;
(7) to provide any additional Events of Default;
(8) to provide for uncertificated securities in addition to
or in place of certificated securities; provided that the
uncertificated securities are issued in registered form for
certain Federal tax purposes;
(9) to provide for the terms and conditions of converting
those debt securities that are convertible into common stock or
another such similar security;
(10) to secure any series of debt securities pursuant to
the indentures limitation on liens;
(11) to add additional guarantors in respect of the debt
securities; and
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(12) to make any change necessary to comply with any
requirement of the SEC in connection with the qualification of
the indentures or any supplemental indenture under the Act.
No supplemental indenture for the purpose identified in clauses
(2), (3), (5) or (7) above may be entered into if to
do so would adversely affect the rights of the Holders of debt
securities of any series in any material respect.
The indenture contains provisions permitting us and the Trustee,
with the consent of the Holders of not less than a majority in
principal amount of the outstanding debt securities of all
series to be affected voting as a single class, to execute
supplemental indentures for the purpose of adding any provisions
to or changing or eliminating any of the provisions of the
indenture or modifying the rights of the Holders of the debt
securities of such series to be affected, except that no such
supplemental indenture may, without the consent of the Holders
of affected debt securities, among other things:
(1) change the maturity of the principal of, or the stated
maturity of any premium on, or any installment of interest on,
any debt security, or reduce the principal amount thereof or the
interest or any premium thereon, or change the method of
computing the amount of principal thereof or interest thereon on
any date or change any place of payment where, or the coin or
currency in which, any debt security or any premium or interest
thereon is payable, or impair the right to institute suit for
the enforcement of any such payment on or after the maturity
(or, in the case of redemption or repayment, on or after the
date of redemption or repayment, as the case may be), or alter
the provisions of the indenture so as to affect adversely the
terms, if any, of conversion of any debt securities into common
stock or other securities;
(2) reduce the percentage in principal amount of any
outstanding debt securities of any series, the consent of whose
Holders is required for any such supplemental indenture or the
consent of whose Holders is required for any waiver of
compliance with certain provisions of the indenture or certain
defaults thereunder, provided for in the indenture;
(3) modify certain provisions of the indenture with respect
to amendments, waivers of past defaults or waivers of certain
covenants, except to increase the percentage in principal amount
of any outstanding debt securities of any series applicable to
such provision or to provide that certain other provisions of
the indenture cannot be modified or waived without the consent
of the Holder of each debt security affected thereby;
(4) impair or adversely affect the right of a Holder to
institute suit for the enforcement of any payment on, or with
respect to, the debt securities of any series on or after the
stated maturity of such series; or
(5) amend or modify the provisions of the indenture
governing the Guarantees in a manner adverse to the rights of
the Holders of any debt securities of any series.
The
Trustee
The Bank of New York Mellon is the Trustee under the indenture.
The Trustee is a depository for funds and performs other
services for, and transacts other banking business with, us in
the normal course of business.
Governing
Law
The indenture will be governed by, and construed in accordance
with, the laws of the State of New York.
Global
Securities
We may issue debt securities through global securities. A global
security is a security, typically held by a depositary, that
represents the beneficial interests of a number of purchasers of
the security. If we do issue global securities, the following
procedures will apply.
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We will deposit global securities with the depositary identified
in the prospectus supplement. After we issue a global security,
the depositary will credit on its book-entry registration and
transfer system the respective principal amounts of the debt
securities represented by the global security to the accounts of
persons who have accounts with the depositary. These account
Holders are known as participants. The underwriters
or agents participating in the distribution of the debt
securities will designate the accounts to be credited. Only a
participant or a person who holds an interest through a
participant may be the beneficial owner of a global security.
Ownership of beneficial interests in the global security will be
shown on, and the transfer of that ownership will be effected
only through, records maintained by the depositary and its
participants.
We and the Trustee will treat the depositary or its nominee as
the sole owner or Holder of the debt securities represented by a
global security. Except as set forth below, owners of beneficial
interests in a global security will not be entitled to have the
debt securities represented by the global security registered in
their names. They also will not receive or be entitled to
receive physical delivery of the debt securities in definitive
form and will not be considered the owners or Holders of the
debt securities.
Principal, any premium and any interest payments on debt
securities represented by a global security registered in the
name of a depositary or its nominee will be made to the
depositary or its nominee as the registered owner of the global
security. None of us, the Trustee or any paying agent will have
any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership
interests in the global security or the maintaining, supervising
or reviewing any records relating to the beneficial ownership
interests.
We expect that the depositary, upon receipt of any payments,
will immediately credit participants accounts with
payments in amounts proportionate to their respective beneficial
interests in the principal amount of the global security as
shown on the depositarys records. We also expect that
payments by participants to owners of beneficial interests in
the global security will be governed by standing instructions
and customary practices, as is the case with the securities held
for the accounts of customers registered in street
names, and will be the responsibility of the participants.
If the depositary is at any time unwilling or unable to continue
as depositary and a successor depositary is not appointed by us
within 90 days, we will issue registered securities in
exchange for the global security. In addition, we may at any
time in our sole discretion determine not to have any of the
debt securities of a series represented by global securities. In
that event, we will issue debt securities of that series in
definitive form in exchange for the global securities.
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DESCRIPTION
OF THE CAPITAL STOCK
The following description of the terms of the common stock and
preferred stock sets forth certain general terms and provisions
of the common stock and preferred stock to which any prospectus
supplement may relate. This section also summarizes relevant
provisions of the Delaware General Corporation Law, which we
refer to as Delaware law. The terms of the Time
Warner restated certificate of incorporation and by-laws, as
well as the terms of Delaware law, are more detailed than the
general information provided below. Therefore, you should
carefully consider the actual provisions of these documents. See
Where You Can Find More Information.
Authorized
Capital Stock
Total Shares. We have the authority to issue a
total of 9,680,000,000 shares of capital stock consisting
of:
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8,330,000,000 shares of common stock, par value $0.01 per
share;
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600,000,000 shares of series common stock, par value $0.01
per share, which are issuable in series; and
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750,000,000 shares of preferred stock, par value $0.10 per
share, which are issuable in series.
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Common Stock. As of December 31, 2009,
1,156,983,090 shares of Time Warner common stock were
outstanding.
Series Common Stock. We have the
authority to issue one or more series of series common stock up
to the maximum number of series common shares authorized. Our
board of directors is also authorized to set the following terms
of a series of common stock before issuance:
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the designation of the series;
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the number of shares to comprise the series;
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any voting rights; and
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any preferences and relative, participating, optional or other
special rights and any qualifications, limitations or
restrictions thereof, of the shares of such series.
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If we offer shares of a new series of series common stock, the
prospectus supplement will specify the designation and number of
that series, and the voting rights and all other rights,
preferences and terms of that series, including any dividend,
redemption, exchange or liquidation rights or provisions. If we
issue shares of series common stock they will be fully paid and
non-assessable.
As of December 31, 2009, no shares of series common stock
were outstanding.
Preferred Stock. We have the authority to
issue series of preferred stock up to the maximum number of
preferred shares authorized. Our board of directors is also
authorized to set the following terms of a series of preferred
stock before issuance:
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the designation of the series;
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the number of shares to comprise the series;
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any voting rights; and
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any preferences and relative, participating, optional or other
special rights and any qualifications, limitations or
restrictions thereof, of the shares of such series.
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The powers, preferences and relative, participating, optional
and other special rights of each series of preferred stock, and
the qualifications, limitations or restrictions thereof, if any,
may differ from those of any and all other series at any time
outstanding.
If we offer shares of a new series of preferred stock, the
prospectus supplement will specify the designation and number of
that series, and the voting rights and all other rights,
preferences and terms of that
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series, including any dividend, redemption, exchange or
liquidation rights or provisions. If we issue shares of
preferred stock they will be fully paid and non-assessable.
As of December 31, 2009, no shares of Time Warner preferred
stock were outstanding.
Listing. We list our common stock on the New
York Stock Exchange under the symbol TWX. No other
capital stock of ours is listed.
Preemptive Rights. The holders of our common
stock, our series common stock and our preferred stock do not
have preemptive rights to purchase or subscribe for any stock or
other securities of ours.
Common
Stock
Voting Rights. Each outstanding share of our
common stock is entitled to one vote per share.
Dividends. Holders of our common stock are
entitled to receive dividends or other distributions when and if
declared by our board of directors. The right of our board of
directors to declare dividends, however, is subject to any
rights of the holders of any outstanding Time Warner series
common stock and Time Warner preferred stock and the
availability of sufficient funds under Delaware law to pay
dividends.
Liquidation Rights. In the event of the
liquidation of our company, subject to the rights, if any, of
the holders of any outstanding shares of our series common stock
or our preferred stock, the holders of our common stock are
entitled to receive any of our assets available for distribution
to our stockholders ratably in proportion to the number of
shares held by them.
Regulatory Restrictions. Subject to any
resolutions of the board of directors creating any series of
preferred stock, any other class or series of stock having
preferences over the common stock as to dividends or upon
dissolution, liquidation or winding up or any series common
stock, outstanding shares of our common stock, any series common
stock or preferred stock may be redeemed by action of the board
of directors to the extent necessary to prevent the loss of any
governmental license or franchise, the holding of which is
conditioned upon stockholders possessing prescribed
qualifications.
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DESCRIPTION
OF THE WARRANTS
The following description of the terms of the warrants sets
forth certain general terms and provisions of the warrants to
which any prospectus supplement may relate. We may issue
warrants for the purchase of debt securities, preferred stock or
common stock. Warrants may be issued independently or together
with debt securities, preferred stock or common stock offered by
any prospectus supplement and may be attached to or separate
from any such offered securities. Each series of warrants will
be issued under a separate warrant agreement to be entered into
between us and a bank or trust company, as warrant agent. The
warrant agent will act solely as our agent in connection with
the warrants and will not assume any obligation or relationship
of agency or trust for or with any holders or beneficial owners
of warrants. The following summary of certain provisions of the
warrants does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the provisions of the
warrant agreement that will be filed with the SEC in connection
with the offering of such warrants.
Debt
Warrants
The prospectus supplement relating to a particular issue of debt
warrants will describe the terms of such debt warrants,
including the following:
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the title of such debt warrants;
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the offering price for such debt warrants, if any;
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the aggregate number of such debt warrants;
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the designation and terms of the debt securities purchasable
upon exercise of such debt warrants;
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if applicable, the designation and terms of the debt securities
with which such debt warrants are issued and the number of such
debt warrants issued with each such debt security;
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if applicable, the date from and after which such debt warrants
and any debt securities issued therewith will be separately
transferable;
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the principal amount of debt securities purchasable upon
exercise of a debt warrant and the price at which such principal
amount of debt securities may be purchased upon exercise (which
price may be payable in cash, securities or other property);
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the date on which the right to exercise such debt warrants shall
commence and the date on which such right shall expire;
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if applicable, the minimum or maximum amount of such debt
warrants that may be exercised at any one time;
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whether the debt warrants represented by the debt warrant
certificates or debt securities that may be issued upon exercise
of the debt warrants will be issued in registered or bearer form;
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information with respect to book-entry procedures, if any;
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the currency or currency units in which the offering price, if
any, and the exercise price are payable;
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if applicable, a discussion of material United States Federal
income tax considerations;
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the anti-dilution or adjustment provisions of such debt
warrants, if any;
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the redemption or call provisions, if any, applicable to such
debt warrants; and
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any additional terms of such debt warrants, including terms,
procedures and limitations relating to the exchange and exercise
of such debt warrants.
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As of December 31, 2009, no debt warrants were outstanding.
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Stock
Warrants
The prospectus supplement relating to any particular issue of
preferred stock warrants or common stock warrants will describe
the terms of such warrants, including the following:
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the title of such warrants;
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the offering price for such warrants, if any;
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the aggregate number of such warrants;
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the designation and terms of the common stock or preferred stock
purchasable upon exercise of such warrants;
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if applicable, the designation and terms of the offered
securities with which such warrants are issued and the number of
such warrants issued with each such offered security;
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if applicable, the date from and after which such warrants and
any offered securities issued therewith will be separately
transferable;
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the number of shares of common stock or preferred stock
purchasable upon exercise of a warrant and the price at which
such shares may be purchased upon exercise;
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the date on which the right to exercise such warrants shall
commence and the date on which such right shall expire;
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if applicable, the minimum or maximum amount of such warrants
that may be exercised at any one time;
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the currency or currency units in which the offering price, if
any, and the exercise price are payable;
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if applicable, a discussion of material United States Federal
income tax considerations;
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the anti-dilution provisions of such warrants, if any;
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the redemption or call provisions, if any, applicable to such
warrants; and
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any additional terms of such warrants, including terms,
procedures and limitations relating to the exchange and exercise
of such warrants.
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As of December 31, 2009, no preferred stock or common stock
warrants were outstanding.
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PLAN OF
DISTRIBUTION
We may offer and sell the debt securities, preferred stock,
common stock or warrants in any one or more of the following
ways:
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to or through underwriters, brokers or dealers;
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directly to one or more other purchasers;
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through a block trade in which the broker or dealer engaged to
handle the block trade will attempt to sell the securities as
agent, but may position and resell a portion of the block as
principal to facilitate the transaction;
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through agents on a best-efforts basis; or
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otherwise through a combination of any of the above methods of
sale.
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Each time we sell securities, we will provide a prospectus
supplement that will name any underwriter, dealer or agent
involved in the offer and sale of the securities. The prospectus
supplement will also set forth the terms of the offering,
including:
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the purchase price of the securities and the proceeds we will
receive from the sale of the securities;
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any underwriting discounts and other items constituting
underwriters compensation;
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any public offering or purchase price and any discounts or
commissions allowed or re-allowed or paid to dealers;
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any commissions allowed or paid to agents;
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any securities exchanges on which the securities may be listed;
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the method of distribution of the securities;
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the terms of any agreement, arrangement or understanding entered
into with the underwriters, brokers or dealers; and
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any other information we think is important.
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If underwriters or dealers are used in the sale, the securities
will be acquired by the underwriters or dealers for their own
account. The securities may be sold from time to time in one or
more transactions:
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at a fixed price or prices, which may be changed;
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at market prices prevailing at the time of sale;
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at prices related to such prevailing market prices;
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at varying prices determined at the time of sale; or
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at negotiated prices.
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Such sales may be effected:
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in transactions on any national securities exchange or quotation
service on which the securities may be listed or quoted at the
time of sale;
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in transactions in the
over-the-counter
market;
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in block transactions in which the broker or dealer so engaged
will attempt to sell the securities as agent but may position
and resell a portion of the block as principal to facilitate the
transaction, or in crosses, in which the same broker acts as an
agent on both sides of the trade;
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through the writing of options; or
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through other types of transactions.
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The securities may be offered to the public either through
underwriting syndicates represented by one or more managing
underwriters or directly by one or more of such firms. Unless
otherwise set forth in the prospectus supplement, the
obligations of underwriters or dealers to purchase the
securities offered will be subject to certain conditions
precedent and the underwriters or dealers will be obligated to
purchase all the offered securities if any are purchased. Any
public offering price and any discount or concession allowed or
reallowed or paid by underwriters or dealers to other dealers
may be changed from time to time.
The securities may be sold directly by us or through agents
designated by us from time to time. Any agent involved in the
offer or sale of the securities in respect of which this
prospectus is delivered will be named, and any commissions
payable by us to such agent will be set forth in, the prospectus
supplement. Unless otherwise indicated in the prospectus
supplement, any such agent will be acting on a best efforts
basis for the period of its appointment.
Offers to purchase the securities offered by this prospectus may
be solicited, and sales of the securities may be made, by us
directly to institutional investors or others, who may be deemed
to be underwriters within the meaning of the Securities Act with
respect to any resale of the securities. The terms of any offer
made in this manner will be included in the prospectus
supplement relating to the offer.
If indicated in the applicable prospectus supplement, we will
authorize underwriters, dealers or agents to solicit offers by
certain institutional investors to purchase securities from us
pursuant to contracts providing for payment and delivery at a
future date. Institutional investors with which these contracts
may be made include, among others:
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commercial and savings banks;
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insurance companies;
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pension funds;
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investment companies; and
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educational and charitable institutions.
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In all cases, these purchasers must be approved by us. Unless
otherwise set forth in the applicable prospectus supplement, the
obligations of any purchaser under any of these contracts will
not be subject to any conditions except that (a) the
purchase of the securities must not at the time of delivery be
prohibited under the laws of any jurisdiction to which that
purchaser is subject and (b) if the securities are also
being sold to underwriters, we must have sold to these
underwriters the securities not subject to delayed delivery.
Underwriters and other agents will not have any responsibility
in respect of the validity or performance of these contracts.
Some of the underwriters, dealers or agents used by us in any
offering of securities under this prospectus may be customers
of, engage in transactions with and perform services for us,
Historic TW, HBO and TBS or other affiliates of ours in the
ordinary course of business. Underwriters, dealers, agents and
other persons may be entitled under agreements which may be
entered into with us to indemnification against and contribution
toward certain civil liabilities, including liabilities under
the Securities Act, and to be reimbursed by us for certain
expenses.
Subject to any restrictions relating to debt securities in
bearer form, any securities initially sold outside the United
States may be resold in the United States through underwriters,
dealers or otherwise.
Any underwriters to which offered securities are sold by us for
public offering and sale may make a market in such securities,
but those underwriters will not be obligated to do so and may
discontinue any market making at any time.
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The anticipated date of delivery of the securities offered by
this prospectus will be described in the applicable prospectus
supplement relating to the offering.
Pursuant to a requirement by the Financial Industry Regulatory
Authority, or FINRA, the maximum commission or
discount to be received by any FINRA member or independent
broker/dealer may not be greater than 8% of the gross proceeds
received by us for the sale of any securities being registered
pursuant to SEC Rule 415 under the Securities Act.
To comply with the securities laws of some states, if
applicable, the securities may be sold in these jurisdictions
only through registered or licensed brokers or dealers. In
addition, in some states the securities may not be sold unless
they have been registered or qualified for sale or an exemption
from registration or qualification requirements is available and
is complied with.
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LEGAL
MATTERS
Certain legal matters in connection with the offered securities
will be passed upon for us, Historic TW, HBO and TBS by Cravath,
Swaine & Moore LLP, New York, New York.
EXPERTS
The consolidated financial statements of Time Warner appearing
in Time Warners Annual Report
(Form 10-K)
for the year ended December 31, 2009 (including the
Supplementary Information and Financial Statement
Schedule II appearing therein), and the effectiveness of
Time Warners internal control over financial reporting as
of December 31, 2009, have been audited by
Ernst & Young LLP, independent registered public
accounting firm, as set forth in their reports thereon included
therein, and incorporated herein by reference. Such financial
statements are, and audited financial statements to be included
in subsequently filed documents will be, incorporated herein in
reliance upon the reports of Ernst & Young LLP
pertaining to such financial statements and the effectiveness of
Time Warners internal control over financial reporting as
of the respective dates (to the extent covered by consents filed
with the SEC) given on the authority of such firm as experts in
accounting and auditing.
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$
$ % Notes
due 2020
$ % Debentures
due 2040
PROSPECTUS SUPPLEMENT
March , 2010
Joint Book-Running
Managers
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BofA
Merrill Lynch |
Citi |
Deutsche Bank Securities |
Morgan Stanley |