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Hiding the peanuts at Time Warner |
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Talk about timing. Time Warner announced its spin-off of AOL
the day before its earlier spin-off comes a cropper.
Sure enough, a heavy debt load that Time Warner shifted to
its former cable sub via the spin-off is to blame. Expect the same thing to happen at AOL.
And now that I think about it, tax and accounting guru
Robert Willens pointed something out to me during our discussion yesterday that’s worth
mentioning in this context. And that is that while such financial engineering may reduce
one company’s debt, it does nothing to de-leverage the overall system.
In other words, these spin-offs don't amount to restructuring in any macro sense.
They're just more or less musical financial chairs, to borrow a former Citigroup CEO’s apt phrasing.
Sorry guys, but somehow I don’t think we’re done with the credit crisis
quite yet.
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