Icahn Aims to Fill TW Board Seats

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Corporate raider Carl Icahn took off the gloves in his ongoing battle with Time Warner Inc., stating in a press release that he and three other institutional investors plan to propose nominees for one or more board seats at the media giant’s next annual meeting of shareholders.

Just who Icahn would seek to put on the board is unclear, although it is possible that he would seek that seat for himself.

“Having shareholder-nominated directors on boards of directors is a major positive in general, and it will prove to be particularly important at Time Warner because of the difference of opinion between many large shareholders and management concerning the direction of the company and the lack of share-price performance under current management,” Icahn said in a prepared statement.

According to that statement, Icahn said his group -- consisting of Franklin Mutual Advisers LLC, Jana Partners LLC and SAC Capital Advisors LLC -- also recommended that at minimum, Time Warner begin the process for a 100% spinoff of its cable assets (Time Warner Cable) and initiate a Dutch-auction tender process for $20 billion of Time Warner shares.

Time Warner has already proposed spinning off 16% of Time Warner Cable next year (after its merger with Adelphia Communications Corp. is complete) and a two-year, $5 billion share-repurchase program.

The Icahn group, which owns about 2.6% of Time Warner stock, had been said to be making moves late last month to accumulate as much as 10% of the media giant’s outstanding stock.

Shortly after announcing his 2.6% stake in Time Warner, Icahn met with Time Warner chairman and CEO Richard Parsons -- a meeting both men called “productive.” But it apparently wasn’t productive enough.

In his statement and an accompanying position paper that was filed with the Securities and Exchange Commission, Icahn said the full cable spinoff and the larger share-buyback program would immediately narrow the gap between Time Warner’s current trading value ($18.21 per share Sept. 12) and the $26-$28 per share Icahn believes the company is worth.

Icahn also dismissed Time Warner’s argument for the smaller spinoff percentage and called its $5 billion buyback plan “a weak attempt to silence growing investor criticism.”

And he managed to throw in a dig at Parsons, stating that at $18.21 per share, Time Warner stock is down 4% since Parsons became chairman May 16, 2002.

“Time Warner's board and management are, of course, committed to creating long-term value for all Time Warner shareholders,” Time Warner said in a prepared statement. “To that end, we have in place a process through which we are carefully reviewing a range of options to increase the value of our company, including those proposed by Mr. Icahn and his group.”

The company continued, “Investors should rest assured that this evaluation is being done in a prudent and deliberate manner with an eye toward creating sustainable value for all of our shareholders. And, as always, we will keep our shareholders informed regarding our initiatives and direction.”

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