In yet another move to get out from under its debt-ridden balance sheet, Time Warner announced yesterday that it will buy back 45 million shares of its Series D preferred stock for $ 2.5 billion.

“Today’s action will result in a positive impact on operating results for our common shareholders and will also reduce the future number of potential outstanding Time Warner common shares,” said TW’s newly named chairman Gerald M. Levin.

The preferred shares could have been converted into common shares.

Wall Street analysts estimated that the move will create another $ 90 million annually in pre-tax cash flow for the company. TW shares closed up 25 cents at $ 32.38, with 497,000 shares trading hands.

TW has raised $ 2 billion in new cash through two debt offerings this month. The proceeds of those financings will be used to buyback the Series D.

There are approximately 65 million shares of the D shares outstanding. Moreover, the company’s board of directors also authorized the future repurchase or redemption of the 20 million remaining D shares, although any action will depend on a number of factors, the company said in a press release.

The redemption price per share of D shares is $ 54.38, which means that the company could be spending another $ 1.1 billion to buy the remaining D shares at the current market price. Analysts speculated that financing the remainder is likely to lead the company back into the debt markets at the next opportune time.

The 45 million shares to be redeemed will be selected by Chemical Bank through a random process and those shareholders will be notified by mail. The redemption date is Feb. 5.

Chemical Bank is also the transfer agent and registrar for the Series D shares and will act as the paying agent.

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