Stock Buyback Will Raise Debt of Time Warner WSJ, 2/21/06 Time Warner Inc.'s agreement with financier Carl Icahn to raise its stock-buyback program to $20 billion will likely lift the company's debt to $35 billion -- the highest in absolute terms ever recorded by the company. Both the company and Wall Street analysts say the increased debt won't endanger Time Warner's investment-grade credit rating. Time Warner says that even at the higher level, its debt won't go above its internal limit of three times its operating income before depreciation and amortization. A spokesman also noted the company's debt has been higher as a ratio of operating earnings in the past. But the higher debt will reduce Time Warner's flexibility to make acquisitions. It also marks a reversal for CEO Richard Parsons, who, under pressure from investors, made debt reduction a top priority when he took the job in 2002. Helped by asset sales, he reduced net debt--debt minus cash and cash equivalents--to $16.1 billion at the end of 2005 from $25.8 billion at the end of 2002. Mr. Icahn and Time Warner late Friday announced a settlement, under which Mr. Icahn will drop his
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