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  "docSlug": "852eb8103109",
  "documentTitle": "Time Warner Inc. (TWX)",
  "authorId": "14_Icahn",
  "authorName": "Lazard",
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  "presentationDate": "2006-02-01 00:00:00",
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  "notes": "This slide outlines a specific capital allocation strategy (debt vs. dividend) for a standalone entity.",
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      "kind": "callout",
      "text": "Investment Grade Rating: Could Support Leverage of $4.8 Billion",
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      "text": "AOL should maintain an investment grade rating with leverage of $4.8 billion, representing 2.5x 2005E OIBDA and 2.8x 2005E OIBDAR, based on both its expected cash flows and perceived risks.",
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      "text": "Free cash flow is projected to be $1,245 million in 2006\nFree cash flow conversion is projected at 63% in 2006, increasing to 74% by 2008\nFree cash flow/debt is projected to be 35% in 2006\nIncorporating the potential to reduce cash taxes through NOLs",
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      "text": "debt capacity: $4.8 billion",
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      "text": "While most Internet competitors have no debt, AOL's business mix is different in that it has significant exposure to the more mature access business. As a result, it has less operating leverage than its pure advertising based Internet competitors. To compensate for this difference, it appears appropriate to capitalize AOL with a manageable amount of debt to help optimize its capital structure and enhance its equity returns.",
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      "text": "AOL should maintain an investment grade rating with leverage of $4.8 billion, representing 2.5x 2005E OIBDA and 2.8x 2005E OIBDAR, based on both its expected cash flows and perceived risks:",
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      "text": "AOL, as a standalone company, should seek to maintain an investment grade rating and pay no dividend. AOL should be able to support $4.8 billion in debt and achieve a rating of no lower than Baa3/BBB-.",
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      "text": "AOL could support significant future leverage, however, AOL should maintain the capacity to reposition itself in a rapidly changing market and to pursue an aggressive investment and acquisition strategy. AOL's major Internet sector rivals, including Microsoft, Google, Yahoo!, eBay and IAC, all have multi-billion dollar cash balances available for investment and acquisition purposes, and actively compete for acquisitions.",
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      "text": "By maintaining an investment grade rating and by paying no dividend, AOL should have the flexibility to invest in organic growth opportunities or in acquisitions. AOL should also retain the flexibility to increase its leverage at a future date or, if appropriate, to accommodate dividends or future stock repurchases.",
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      "text": "(a) Assuming the NOLs are retained by AOL, reductions in cash taxes paid are expected to yield a total present value of $1.4 billion.",
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      "kind": "title",
      "text": "X. AOL FINANCIAL STRATEGY",
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