National Amusements, Inc., a theater chain controlled by Summer Redstone, Wednesday evening announced the pricing for the one-time underwritten sale of a portion of the company's stake in media companies CBS Corp. (CBS,CBS-A) and Viacom Inc. (VIA, VIA-B). The company said it expects to receive aggregate proceeds of about $827.8 million, net of underwriting discounts and commissions, from the sale.
The aggregate proceeds could be about $910.6 million if the underwriters exercise their overallotment options in full, the company noted.
Norwood, Massachusetts-based National Amusements, or NAI, said it has agreed to sell 26.04 million shares of CBS class B common stock owned by it, plus an additional 2.60 million shares if the underwriters exercise their overallotment option in full, at a price of $12.00 per share.
In a concurrent underwritten offering, the company also agreed to sell 19.38 million shares of Viacom class B common stock owned by it, plus an additional 1.94 million shares if the underwriters exercise their overallotment option in full, at $28.25 per share.
Citi is the sole book-runner, and Citi and J.P.Morgan are joint lead managers for the offerings that are expected to close on October 20, 2009. Following the offerings, NAI will own 79.07% of the voting shares and 6.05% of the equity of CBS, and 79.87% of the voting shares and 6.89% of the equity of Viacom.
Separately, CBS Corp. and Viacom both said they were not selling any securities in connection with the offering and will receive no proceeds. Viacom noted that the gross offering proceeds to NAI from the sale of the company's shares would be about $547.6 million, which could increase to about $602.3 million if the underwriters' 30-day over-allotment option is exercised in full. Viacom includes the Paramount movie studio as well as cable networks MTV and Comedy Central, while CBS runs the CBS broadcast network and pay-TV channel Showtime Networks.
NAI, a motion picture exhibition company, has assets including more than 1,500 motion picture screens in the U.S., U.K., Latin America and Russia, a portfolio of real estate assets, and a partnership in the online ticketing service, MovieTickets.com, in addition to controlling stakes in Viacom and CBS.
Earlier in the day, NAI, announced it is selling a portion of its stakes in CBS and Viacom, with an aim to pay off its debts. The company added that it will retain major stake and voting control in both CBS and Viacom after the offerings, and will also retain theater chain assets.
NAI said that the one-time underwritten sale of its CBS and Viacom stock and the anticipated sales of "certain non-core assets" will enable it to retain control of both CBS and Viacom as well as retain full ownership of all of its theater assets in the UK and Brazil in addition to its core theater assets in the United States.
The company added that it has no intention to further reduce its ownership levels in CBS and Viacom and will retain in excess of 75% of the voting control of each company after giving effect to the offerings. According to reports on Wednesday, the company's plan to sell "non-core assets" would likely be 35 theaters in the U.S.
NAI was also forced to sell CBS and Viacom shares in 2008 also to make certain debt payments.
NAI, facing a $500 million debt payment due later this month, had intended to repay the money by selling its chain of movie theaters. However, the sale process has dragged on, raising speculation that a deal might not occur in a difficult financing environment.
CBS closed Wednesday's regular trading session at $12.52, up $0.37 or 3.05%, on a volume of 30.35 million shares. CBS-A closed at $12.57, up $0.41 or 3.37% on a volume of 42 thousand shares.
VIA closed Wednesday's trading at $30.58, up $0.49 or 1.63% on a volume of 0.26 million shares. VIA-B closed at $28.91, up $0.21 or 0.73% on a volume of 5.12 million shares.
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