S&P upgrades Time rating to triple B
Stock soars to $98.87 on news
News of the upgrade sent Time Warner stock soaring, closing up $1.18 to $98.87 although it traded as high as $99.68 during the day.
The upgrade reflects the company's "strong operating performance and financial discipline that have fueled improvement in key credit measures," S&P said. The agency noted that after a period of "acquisition activity and higher financial risk during the 1993-95 period," the company has instituted a more disciplined financial management in the past two years, keeping capital expenditures flat throughout the company in an effort to reduce debt and "emphasize returns on assets."
One of TW's objectives was to improve its credit rating to at least the triple B level, which helps reduce the company's borrowing costs. While its debt level has only dropped slightly, to $16 billion on Sept. 30, its cash flow (earnings before interest, taxes, depreciation and amortization) has risen sharply, lowering its debt-to-cash-flow ratio from 6.6 in '92 to 3.2 now.
