By Yinka Adegoke
NEW YORK (Reuters) - The long-expected spin-off of Time Warner Cable Inc
Time Warner first set the wheels in motion for an eventual separation of its telecommunications cable operations from content assets nearly four years ago.
The move will refocus Time Warner on its major media brands, which include cable networks CNN and HBO, magazines like Time and Sports Illustrated, and its Hollywood studio, Warner Bros.
"Both companies will be better positioned to compete, with capital structures more suited to their respective needs," said Time Warner Chief Executive Jeff Bewkes in a statement on Thursday.
Cable operators typically have a more highly leveraged capital structure than pure content companies, since they usually have to invest heavily in infrastructure.
The separation terms were originally agreed on May 20, 2008, and the transaction has been winding its way through the U.S. regulatory process.
In the last few weeks, Time Warner received approval from the U.S. Federal Communications Commission and the U.S. Internal Revenue Service, which cleared the deal as a tax-free distribution.
The separation will be legally completed on March 12 when Time Warner stockholders receive a pro rata portion of all of the Time Warner Cable stock held by Time Warner for each share.
Time Warner Cable will pay a special cash dividend of $10.27 per share to holders of its common stock on March 12, or a total of $10.9 billion. Time Warner holds around 85 percent of the cable unit, meaning it will get about $9.25 billion.
The cable unit said its board a similar one-for-three reverse stock split, to take effect on March 12, after it makes the special dividend payment and reclassifies each outstanding share of its Class A and B common stocks as one stock.
The cable company's stock will start trading on a reverse stock split-adjusted basis as of March 13.
Bewkes said earlier this month that the company will likely spend some of the dividend cash to reduce debt but is also considering increasing dividends and share buybacks. It will also consider potential acquisitions.
Time Warner also said its board has approved a one-for-three reverse stock split that becomes effective on March 27. Time Warner holders will on that date receive the dividend distribution of the Time Warner Cable stock.
Time Warner, whose stock has fallen more than 54 percent in the last 12 months, hopes the reverse stock split will aid its languishing share price.
(Reporting by Yinka Adegoke; editing by Richard Chang, Gary Hill)
