AOL gets $200 million infusion
America Online announces that it has secured a two-year, $200 million line of credit, boosting its standing among analysts.
When combined with the $350 million AOL raised last month through the sale of convertible subordinated notes, and with whatever remains of the $229 million in cash and cash equivalents the company had on hand at the end of its last quarter, AOL has amassed what analysts are calling an impressive reserve.
"AOL is entering a period in which it is becoming a major media franchise," said Shaun Andrikopoulos, analyst with BT Alex. Brown. "As such, it is important to have considerable liquidity on the balance sheet, which we view as a war chest to drive mass-market adoption of services and products, and to invest in next-generation technology and platforms."
While AOL would not specify how it intends to use its latest cash infusion, one analyst speculated that the company might invest aggressively in broadband Internet access technologies, such as XDSL or cable modem access, as well as in other consumer applications, such as Internet telephony and Web TV.
AOL's $200 million revolving line of credit went into effect on November 25. Chase Manhattan Bank and Dai-Ichi Kangyo will manage the transaction through a syndicate of commercial lenders.