National Amusement Completes Restructuring

National Amusements, the Boston-based theater chain that holds most of Viacom and CBS chairman Sumner Redstone's holdings in the two entertainment giants, said it has completed a previously announced deal to restructure its debt.
Redstone came under fire last October when he was forced to sell a large chunk of Viacom and CBS stock, some $233 million worth, to cover loan commitments at NAI. That sparked fears that the mogul would have to further reduce his interests in the media companies.
Redstone later sold his controlling interest in videogame maker Midway Games for $100,000, a fraction of its worth, and has vowed that he will not have to sell a single Viacom or CBS share to satisfy NAI obligations. NAI reached the agreement with its lenders in February and in the meantime NAI has reportedly been shopping some of its theater properties to raise more cash.
According to the February deal, NAI has extended maturities on its $1.6 billion in debt to 2010 and that about $500 million will come due at the end of this year.
In an SEC filing Tuesday, Viacom said that NAI has pledged substantially all of its assets in the restructuring, including its Viacom and CBS stock. As a result, a default on those loans could force a foreclosure on the assets - including the Viacom and CBS stock - and could end up in a change of control at both companies.
In a research note, Pali Research media analyst Richard Greenfield said that default scenario is highly unlikely, given that NAI already has $500 million of cash and available for sale securities on its balance sheet, enough to meet the 2009 obligation. He added that the sale of theaters would provide an additional cash cushion.
"While investors may be excited by the prospect of an NAI default causing a change in control of Viacom or CBS (as debt is now secured by Viacom and CBS voting shares), we believe the restructured NAI debt agreement should enable NAI to avoid future sales of Viacom and CBS shares," Greenfield wrote.