Time Warner said it will lay $1.3 billion in debt on Time Inc. when the magazine division is spun off as an independent public company later this year.
The media giant also said it will take a future charge against earnings of $150 million tied to the magazine division’s restructuring that began on Tuesday.
“We intend to spin off Time Inc. with net debt of around $1.3 billion,” said Chief Financial Officer Howard Averill, speaking on the conference call to analysts following the Time Warner earnings report.
It was the first official acknowledgment of how much debt the new company will have to shoulder.
“We think that level will allow sufficient flexibility to both invest in the business and provide direct return to shareholders while also optimizing its cost of capital and delivering attractive, levered equity return to investors.”
Time Warner will not retain any stake in Time Inc. after the spinoff, but all of its current shareholders will be issued stock in the new publicly traded company. Time Warner CEO Jeff Bewkes said the spinoff is still on target for the second quarter.