AOL Time Warner to Sell $3 Billion Worth of Bonds

AOL Time Warner Inc., the world’s largest Internet and media company, said Tuesday that it plans to sell $3 billion in global bonds in its first post-merger foray into the bond market.

New York-based AOL will use proceeds from its sale of five-, 10- and 30-year debt, expected as soon as today, largely to pay down short-term bank debt.

The company was formed Jan. 11 from the union of AOL, the world’s No. 1 Internet service provider, and Time Warner, the No. 1 U.S. publishing and entertainment conglomerate.

Analysts say the merged company, which is conducting a quick “drive-by” sale to take advantage of a stable market for investment-grade corporate bonds, should have a successful coming-out party in the debt capital markets.

“This is a market that worships critical mass and leadership, and I think AOL Time Warner has an abundance of both,” said Bishop Cheen, a director and analyst at First Union Securities in Charlotte, N.C. “There is money that is dying to be invested and put to work in brand-name companies, and how much better a brand name do you get than AOL Time Warner?”

AOL Time Warner’s many units include America Online, 24-hour news network CNN, the WTBS superstation, TNT, Home Box Office, Time Warner Cable, Warner Bros. and New Line Cinema movie studios, the Warner Music Group, Time magazine and the Atlanta Braves baseball team.

It is not the only brand-name company conducting a jumbo bond sale. The finance arm of Dearborn, Mich.-based auto maker Ford Motor Co. is expected to sell $5 billion of its own bonds today.

AOL Time Warner is scheduled to report first-quarter earnings next week, and the recent plethora of warnings and reports of lower-than-expected corporate profits could add a bit of uncertainty for bond investors. Analysts polled by First Call/Thomson Financial expect the company to post a profit of 20 cents per share.

Shares of AOL Time Warner rose 54 cents on Tuesday to close at $40.01 in trading on the New York Stock Exchange. Their 52-week high is $69.38, set one year ago. Their 52-week low is $31.75, set Jan. 2.