Redstone Rejects Viacom, CBS Sale
Media mogul Sumner Redstone said Wednesday there's "not a chance" he'll sell Viacom Inc. or CBS Corp. to resolve the debt issues facing his family holding company, National Amusements Inc.
Sumner Redstone sold $233 million in Viacom and CBS holdings this month.
In an interview, Mr. Redstone ruled out selling any shares in either of the two companies he controls, even if negotiations with lenders about a debt restructuring turn sour. Mr. Redstone acknowledged there is "no guarantee" those negotiations will result in a deal, but he described them as "extremely constructive."
Mr. Redstone rushed to sell $233 million of his family's Viacom and CBS holdings earlier this month to avoid breaching the terms of a National Amusements loan. The holding company based in Norwood, Mass., has since been in urgent negotiations with its lenders about restructuring $1.6 billion of debt. Investors have been concerned that Mr. Redstone may be forced to sell more of his family's holdings and even the companies themselves.
Asked whether he would consider selling one of the companies, Mr. Redstone said: "Not a chance. I will not sell Viacom and I will not sell CBS. They're two great companies." He added: "We have no intention to sell any more stock and I'm decisive about that."
Mr. Redstone's comments suggest he would turn to other assets if National Amusements found itself in the situation of having to repay a big chunk of its debt. In addition to the Redstones' controlling stake in Viacom and CBS, National Amusements houses the family's privately held movie-theater chain, as well as stakes in publicly traded videogame company Midway Games Inc. and slot-machine company WMS Industries.
"I have every reason to have some confidence" that we will be able to reach a deal with the banks, Mr. Redstone said. "I have no guarantee though...of course, anything is possible: The world might end tomorrow."
Mr. Redstone characterized the sale of his $233 million of stock as an "infinitesimal percentage of what I own. I still own billions of dollars of stock." The stake he sold represented about 10% of his holding at the time. "We sold a little bit and the rest is not for sale."
People familiar with the situation said that while negotiations with lenders are progressing, a deal is unlikely for several weeks. The most urgent issue to resolve is $800 million of bank debt with a December deadline.
The drama over Mr. Redstone's stock sale raises questions over why National Amusements didn't pre-empt the situation by opening discussions with banks earlier, especially with so much debt coming up for repayment and equity values in freefall. While the debt was unsecured, the terms of the covenants were linked to the value of National Amusements holdings, which declined sharply in the recent stock-market plunge.
"While I control National Amusements, I'm not involved in the day-to-day operations," Mr. Redstone said in response to whether the situation could have been managed better. "Perhaps in the future I'll get more involved."
Mr. Redstone's comments come a day after he announced he and his wife Paula filed for divorce. "It was a long time coming," he said. "We intend to remain good friends."
