National Amusements Inc. (NAI), via which the Redstone family controls both CBS Corporation and Viacom, confirms that it is in talks with its lenders about a covenant compliance issue. The company blames the recent market volatility affecting its major holdings – CBS and Viacom. The latest announcement from National Amusements came just a few days after it sold $233 million worth of CBS and Viacom stock to shore up its cash position.
National Amusements said it is engaged in “constructive discussions with its bank group and noteholders regarding a covenant issue under NAI’s debt, which is unsecured.”
The latest statement reaffirmed what Shari Redstone said previously, that the stock sales were precipitated by the sharp stock price declines at CBS and Viacom, not anything to do with NAI’s movie theater business. Shari runs the theater chain. Her father, Sumner Redstone, is Chairman of both CBS and Viacom.
“The issue resulted from recent unprecedented market volatility which led to a precipitous drop in the value of the CBS and Viacom shares which are among the assets owned by NAI. A committee of the NAI Board of Directors comprised of George Abrams, David Andelman, and Shari Redstone is overseeing these discussions,” Friday’s statement said.
NAI is privately held. Analyst Rich Greenfield at Pali Research estimated that NAI has $1.6 billion of debt, of which half comes due in December. If that $800 million cannot be refinanced, it is conceivable that NAI would have to sell all of its non-voting stock in CBS and Viacom and even some of its voting stock.