Tri-Star Pictures said Wednesday that it has sold 9% of its stock for $30 million to New York investor Ronald O. Perelman to help finance its $300-million acquisition of the Loews movie theater chain.
Perelman's private holding company, MacAndrews & Forbes, has acquired such diverse companies as Technicolor and Consolidated Cigar and has a 32% stake in Revlon. Last week, the 43-year-old financier launched a $4.12-billion hostile takeover bid for Gillette.
Perelman has agreed not to acquire additional shares of Tri-Star for seven years, according to Victor Kaufman, chairman and chief executive of the New York-based motion picture company.
In addition, Perelman will not seek representation on the board and promised to cast his shares in support of the board, Kaufman said. Tri-Star will have first right of refusal to purchase Perelman's stake if he decides to sell.
Also Buying UA Theaters
The Perelman sale raises only a small portion of the sum that Tri-Star needs to pay for its acquisitions of two large theater chains. In addition to Loews, Tri-Star has announced plans to acquire the United Artists movie theater chain for about $500 million from Tele-Communications.
Earlier this month, industry sources said Tri-Star was considering the sale of 35% of its stock to Tele-Communications as a $125-million partial payment for the UA theaters. On Wednesday, Kaufman said he doesn't expect the Perelman deal to jeopardize ongoing talks with Tele-Communications.
Kaufman said that he expects to pay for the Loews acquisition through a combination of equity and bank borrowings and that the Perelman deal is only "part" of the equity.
The Perelman transaction dilutes the holdings of Tri-Star's two largest shareholders, Coca-Cola Co. and Time Inc., which co-founded Tri-Star four years ago.
Coca-Cola's 39% stake of Tri-Star's outstanding shares drops to 35%, while Time's 13% stake declines to 12%, according to Victoria Cohen, Tri-Star's vice president of finance.