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Seagram Seeks $2.5 Billion to Reduce Debt

May 14, 1999| From Times Staff and Wire Reports

Seagram Co., owner of Universal Studios and maker of Chivas Regal Scotch whiskey, will seek to raise as much as $2.5 billion to reduce its debt.

The Montreal-based company will raise about $1.5 billion through the sale of common stock, according to a registration statement filed with the Securities and Exchange Commission. The other $1 billion will come from the sale of convertible equity units.

In addition, one arm of the Bronfman family that controls the corporation will sell shares for financial and estate-planning purposes.

A trust set up for the benefit of co-Chairman Charles Bronfman, members of his family and Canadian charitable foundations will offer as much as an additional $500 million of common shares, the company said. Charles Bronfman is the uncle of Seagram Chief Executive Edgar Bronfman Jr.

In a statement, Charles Bronfman, who was initially skeptical of his nephew's plunge into the entertainment business in 1995, said he remains "very supportive of the company's leadership, its strategic direction and performance."

Seagram operates spirits, wine and entertainment businesses worldwide.

The company said it will use the proceeds to repay bank debt incurred in its $10.4-billion acquisition of PolyGram, which created the world's biggest record company. It also said it will use some of the money to repay commercial paper borrowings and for general corporate purposes.

Each equity unit consists of a contract to purchase common shares of Seagram and a subordinated deferrable note of its subsidiary, Joseph E. Seagram & Sons Inc., that is guaranteed by the parent.

Goldman, Sachs & Co. will underwrite the stock sale.

Bloomberg News was used in compiling this report.

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