Cablevision's (CVC) big dividend is moving forward.
Three weeks after
reviving plans for a $3 billion payout, the Bethpage, N.Y., cable TV operator has tentatively settled a lawsuit that sought to block the company's plans. The settlement requires court approval, but in the meantime the board has asked two independent directors to consider a special one-time dividend.
The Dolan family, which runs the company and holds a 20% stake in the business, would pocket about $600 million in a proposed $3 billion payout.
In December, Cablevision canceled a previously adopted plan for a $3 billion dividend and a $1 billion financing deal after finding it had breached covenants of an earlier credit line. At the time, the company blamed the misstatement of an $18 million loan from a supplier, which put the company in violation of a credit agreement.
But investors and analysts questioned how a minor infraction could derail a major spending plan. Observers focused on missed payments on a
$266 million personal loan to the Dolan family trust from Bear Stearns in February 2000. Bear reps and Cablevision both said the deal had no effect on Cablevision's financial situation.
Last month, the No. 6 cable shop secured a new credit facility that would allow the company to use up to $3.1 billion of additional funds from an uncommitted incremental credit facility. Among other things, say observers, the new credit line would help cover the special dividend.
Cablevision was down 16 cents to $26.54 in early trading Tuesday.