(Reuters) – Sumner Redstone, a controlling shareholder of Viacom Inc and CBS Corp, might be forced to sell either of the companies to help tide over the current financial crunch being faced by his movie theater chain, National Amusements Inc, the New York Post said on Sunday.
National Amusements Inc said last week it was in talks with bankers to renegotiate terms on a $1.6 billion debt, due to a sharp drop in the value of CBS and Viacom.
The $1.6 billion debt was arranged by Bank of America and others. Half of that, $800 million, will need to be repaid by year’s end.
Sources close to Redstone and Viacom told the paper that Redstone’s current cash situation is so bad that selling Viacom or CBS is now a real possibility.
A source close to CBS told the Post that Redstone was already looking at his entire portfolio to identify possible sale candidates.
The paper quoted another source saying the situation was so grim that even the sale of pieces of CBS — like some radio stations, or the publisher Simon & Schuster — or some of the Viacom properties would not be enough to cure the cash shortfall.
Redstone used shares in CBS and Viacom as collateral for loans used to back expansion plans for his privately-held National Amusements Inc, the Post said.
At issue is a covenant that requires National Amusements to maintain a certain debt-to-asset ratio, which it failed to do after shares of Viacom and CBS plunged on fears of an advertising slump.
Viacom and CBS did not immediately return calls seeking comment. National Amusement Inc could not be reached for comment.
(Reporting by Shradhha Sharma in Bangalore; Editing by Andrew Callus)