Time Warner to Cut Debts

The media-entertainment giant Time Warner Inc. said Friday that it plans to arrange a private placement of $1 billion in long-term debt with institutional investors.

The company said it planned to use proceeds from the placement for reducing its commercial bank debt and said the move would strengthen its balance sheet.

Its bank debt accounts for most of its $8.7 billion in long-term debt.

Securities analysts who follow Time Warner said the private placement would boost Time Warner’s debt costs because the rates it must pay on its commercial bank loans are relatively low.

But they said the move would assure a more predictable repayment schedule, protect against sudden increases in rates and reduce the risk that lenders would be able to dictate a course of action sometime in the future.

“This is probably as good a time as any for locking in money for the long term,” said John Reidy, a media analyst for Smith Barney, Harris Upham & Co. “Interest rates are low and the company is in good health.”