Report: Redstone In A Financial Squeeze
October 28, 2008 at 5:29 AM (PT)
NATIONAL AMUSEMENTS, the movie-theater chain that controls SUMNER REDSTONE's interests in VIACOM and CBS, faces the difficult task of getting more than 50 institutions to unanimously agree on revised terms to refinance $800 million of the company's debt, reports PETER LAURIA in TODAY's NEW YORK POST. The $1.6 billion debt load that NATIONAL AMUSEMENTS is carrying is divided into two $800 million pieces -- one a bank loan and the other a private placement. The company is trying to refinance both simultaneously.
The bank loan, which was arranged by BANC OF AMERICA SECURITIES and comes due in DECEMBER, requires approval from 50% of the lending institutions involved before its terms can be changed, according to two sources with knowledge of the loan's terms. But the taller hurdle rests with the $800 million private placement, which requires the OK of all 55 institutions that make up the syndicate before the terms of debt can be changed.
"Do you know how difficult it is to get 55 people to agree on anything?" asked one source rhetorically.
VIACOM CEO PHILIPPE DAUMAN had to spend much of a budget meeting last FRIDAY with VIACOM senior executives walking them through the issues confronting NATIONAL AMUSEMENTS, according to one source with knowledge of the meeting.
though this source said DAUMAN stressed that the issues at NATIONAL AMUSEMENTS are separate from VIACOM and that VIACOM's financial situation was "strong" and its balance sheet "excellent," he did concede that the company would be looking at ways to keep costs in line next year.
Employees translate the comments to mean layoffs.
"There's an environment of fear," said a source inside VIACOM. "Everyone is worried about getting fired."