AOL expects to use the net proceeds from the offering of the notes to fund the net cost of convertible note hedge transactions and warrant transactions with the hedge counterparties.
AOL also intends to use up to $50 million of the net proceeds of the offering to repurchase shares of its common stock from purchasers of the notes in privately negotiated transactions.
These repurchases are part of AOL’s previously announced $150 million share repurchase program.
In addition, following the offering AOL may repurchase additional shares of its common stock pursuant to its stock repurchase program.
AOL expects to use the remainder of the net proceeds for general corporate purposes, which may include share repurchases, acquisitions or other strategic transactions and working capital.
Shares of AOL closed down -1.72% to $42.33 yesterday.
TheStreet Ratings team rates AOL INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate AOL INC (AOL) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."