How will Time Warner share the wealth?

Will one dividend lead to another? Time Warner (TWX) will be getting a big payout as its Time Warner Cable (TWC) unit becomes independent, but the big media company isn’t saying what it will do with the money. Time Warner, the parent of Fortune and CNNMoney.com, will receive $9.25 billion when Time Warner Cable pays its shareholders a $10.27-a-share dividend just before the companies formally separate. Time Warner will then distribute its 85% stake in Time Warner Cable to Time Warner shareholders in a tax-efficient transaction that has yet to be determined.

The deal isn’t risk-free for either company, given the touchy state of the credit markets. Time Warner Cable said it expects to fund the one-time dividend through its existing revolving credit facility and $9 billion from a new, committed two-year bridge term financing from a syndicate of banks. But Time Warner has agreed to provide a commitment for a supplemental two-year term loan of up to $3.5 billion to enable Time Warner Cable to repay the bridge financing at its maturity, in what the companies called “the unlikely event Time Warner Cable hasn’t replaced the bridge financing with long-term financing.”

Meanwhile, Time Warner is trying to figure out how much money to return to shareholders and how much to plow into new business opportunities. The company currently pays a quarterly dividend of just 6.25 cents, yielding 1.5%, and may be considering sweetening that rate in hopes of attracting new investors into its stock, which has lost more than a quarter of its value since the start of last year.

“Once the transaction is completed, Time Warner will have a streamlined portfolio of leading businesses focused on creating and distributing our branded content across traditional and digital platforms worldwide,” Time Warner chief Jeffrey Bewkes said. “Our company will also have increased flexibility in its capital structure. We’ll continue to balance investment opportunities against the benefits of returning capital directly to our stockholders, within a disciplined financial framework intended to maintain solid investment-grade credit ratings.”