Redstone debt crunch could be easing, despite income loss

February 19, 2009

Here’s the latest on Sumner Redstone: On CBS’s earnings call he reiterated that negotiations with lenders regarding National Amusements’ debt situation were moving forward.

“We are making very good progress with our creditors, and as I have also said before, we have not, since our original sale, sold a single share of CBS or Viacom, and our lenders are not urging us to do so,” he said.

He also told investors that the CBS dividend cut — they slashed it by 82 percent to 5 cents — wouldn’t mean a thing as far as National Amusements’ debt talks go (How the dividend cut will impact Redstone himself is another matter. Last year, he took home more than $80 million in dividend payments).

“Now with respect to the CBS dividend, I can tell you that the topic has been discussed with the lenders, and it will not impact the successful conclusion of the discussions. So that’s the update, and again, because of the ongoing nature of the discussions, I must decline to further comment,” he said.

Redstone may not be commenting further, but there is certainly some chatter about what’s happening with National Amusements. People familiar with the matter tell us that National Amusements is close to putting several hundred movie theaters up for sale.

Here’s the upshot:

An official sales prospectus on the theater chain is expected to go out any day now and bankers are reaching out to potential buyers to get them to sign confidentiality agreements, the sources said.

All U.S. theaters except those in the New England region are expected to go on sale, along with theaters in Latin America and possibly those in the United Kingdom. The theaters in Russia will be excluded from the sale, the sources said.

National Amusements operates more than 1,500 movie screens in these countries. The New England region and Russia account for roughly 300 screens. Citigroup Inc will handle the sale, the people said.

A sale could help National Amusements pay off the $800 million in bank loans it has due — or at least part of the payment. Analysts figure the theater chain could fetch up to $500-700 million. It’ll be up to Redstone to figure out how to make those numbers work.

Keep an eye on:

  • Walt Disney Co will streamline some behind-the-scenes operations, including menu planning and ride design, at its two U.S. theme parks to try to offset the effects of the global economic downturn (Reuters)
  • Entertainment industry jobs in the Los Angeles area will fall further in 2009 after an annual decline in 2008, according to a research report (Reuters)
  • The New York Post faced widespread criticism for a cartoon it published that some say compares President Barack Obama to a chimpanzee (WSJ.com).
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