News

Investment Bankers to Appraise TWE Stake

5/14/2001 11:57 AM Eastern

AT&T Corp. and AOL Time Warner Inc. have hired investment bankers to
value AT&T's 25.5 interest in Time Warner Entertainment -- a move that
effectively ends the sometimes contentious negotiations between the two
parties.

AT&T has been negotiating for months to sell its TWE stake -- inherited
in its acquisition of MediaOne Group Inc -- to AOL Time Warner, but they have
been unable to reach an agreement.

Now, determining the value of the partnership -- which includes Home Box
Office, the Warner Bros. film studios and interests in Time Warner Cable systems
-- will be left up to the investment bankers.

AT&T said Monday that it hired Credit Suisse First Boston to value its
TWE stake. AOL Time Warner, which owns the other 74.5 percent of TWE, said it
has retained Bear Stearns & Co.

According to sources, both parties have about 20 days to select a third
investment banker that will determine the amount of shares that could be sold in
a public offering, the price at which the shares could be sold and the price at
which the remaining AT&T shares could be sold.

After that, TWE must determine whether to proceed with the registration
process. If it decides to go ahead, TWE would have to file a registration
statement, and the shares would be offered to the public. If it decides not to
proceed, AT&T could force TWE to buy its interest at the value the
investment banks determine.

'As we've repeatedly said, we're comfortable with the registration process,'
AOL Time Warner said in a prepared statement. 'The decision to move forward with
the registration process will have no impact on the way we manage the day-to-day
operations of TWE.'

In February, after several months of negotiation, AT&T requested that AOL
Time Warner convert the limited partnership into a corporation and register its
stake for sale in a public offering.

Back in February, AOL Time Warner had reportedly offered to pay between $9
billion and $10 billion for AT&T's interest in TWE, but it insisted on
greater access for its America Online Inc. Internet service on AT&T's cable
systems in return.

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