Redstone is trying to reassure investors that the company isn’t dead and to stop selling. Somehow he just doesn’t give us that reassured feeling.
WSJ: Attempting to head off panic selling in shares of Viacom Inc. and CBS Corp., Sumner Redstone issued a statement Thursday stressing that the value of his assets still exceeds his $1.6 billion debt pile and repeating that he has no plans to sell stock in either company.
Viacom and CBS stock have sunk in the past week, including a hard tumble Wednesday as investors worried that the fall would undermine Mr. Redstone’s negotiations with his lenders and force him to sell more stock in the two companies he controls. Mr. Redstone’s holding company, National Amusements Inc., has been in urgent negotiations to restructure its debt after the stock market rout took a toll on its holdings.
Mr. Redstone is expected to have to sell some of his holdings to get bankers to agree to a restructuring. Advisers are currently combing through the family’s assets to assess their value and ease of sale, according to people familiar with the situation. But the two sides are exploring a longer timetable to sell any assets in an effort to avoid fire-sale valuations, the people said.
These are his words. Hmmm
In his statement, Mr. Redstone said the talks were proceeding in a “smooth and constructive manner.”
He continued: “It is important to understand that the value of National Amusement’s assets well exceeds its debt and National Amusements has no intention of selling any stock of either Viacom or CBS.”
And this is what’s happening with the stock.
Viacom Class B shares were trading up 6.1% at $16.06 in afternoon trading Thursday on the New York Stock Exchange, while CBS shares were down 3% at $6.25. Viacom shares have fallen 13% so far this week and CBS is down 23%.
Mr. Redstone has already sold $233 million of his Viacom and CBS stock to keep lenders at bay after tripping an asset-coverage covenant, which requires the value of assets to be a certain multiple of debt.
What might he do?
…Mr. Redstone has said he doesn’t want to sell Viacom or CBS. Other contenders include the family’s movie theatre chain, a stake in National Amusements, and stakes in video game company Midway Games Inc. and slot machine company WMS Industries Inc.
The challenge for National Amusements in selecting assets to sell is to make sure it has enough cash flow going forward to support its debt. National Amusements relies heavily on the theatre chain and dividends from CBS for cash. Soothing concerns that it may have to cut its dividend amid the advertising downturn, CBS announced Thursday that its next quarterly dividend would be 27 cents a share, unchanged from the last quarter.
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