Time Warner Cable Inc. (NYSE: TWC), a major U.S. MSO that's in the process of breaking away from the Time Warner Inc. (NYSE: TWX) mother ship, priced a $5 billion underwritten public offering of debt securities Tuesday.

Broken down, the first segment is comprised of $1.5 billion of 6.20 percent notes due in 2013. The $2 billion chunk (6.75%) is due in 2018, and the final $1.5 billion of 7.3 percent notes is due in 2038. (See TWC Prices Debt Offer.)

The MSO said the net proceeds from the offering will be used to finance, in part, a one-time cash dividend to stockholders of Time Warner Cable, payable just prior to its separation from Time Warner Inc.

In May, Time Warner Inc. agreed to spin off its 85.2 percent stake in the MSO. The deal, pending Time Warner Cable's ability to strike new change-of-control franchise agreements, is expected to close sometime in the fourth quarter of 2008. In announcing the separation deal, the MSO declared a one-time dividend to all stockholders of $10.27 per share -- $10.9 billion in total -- that's, again, payable when the MSO and Time Warner Inc. cut the cord. Time Warner Inc. is positioned to rake in $9.25 billion from this special dividend. (See Time Warner Cable Leaving the Nest.)

If the deal doesn’t go down and the special dividend isn't paid, the MSO said it will use the proceeds for general corporate purposes, including debt repayment. Time Warner Cable expects the sale of debt securities to close this Thursday (June 19).

Time Warner Cable, which ended the first quarter with 13.3 million basic subs, is the second-largest U.S. cable MSO, behind only Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s 24.7 million. Time Warner Cable shares were down 40 cents (1.39%) to $28.29 each in mid-day trading Tuesday.

— Jeff Baumgartner, Site Editor, Cable Digital News