Media mogul Sumner Redstone has proposed selling part of his family holding company's movie theater circuit to pare down its debt, according to people close to the situation.
A restructuring plan submitted to bankers this week by Redstone's private holding company, National Amusements Inc., also proposed shedding stakes in the video game company Midway Games Inc. and slot machine maker WMS Industries Inc., according to one person who asked not to be identified because he was not authorized to speak on the record.
"Just selling Midway Games and WMS would not solve all of his problems, and I guess that means tapping into the theater chain," said Harold Vogel, a noted media analyst.
National Amusements has $1.6 billion in debt, including an $800-million bank loan due next month. Determining the value of the 1,500-screen theater chain, which includes the Bridge in Westchester, is difficult. In the past, Redstone has placed the value at more than $1 billion, partly because many of the theaters sit on land owned by the company.
The bulk of National Amusements' theaters are in the Northeast and the Midwest. The company accumulated some of its debt by expanding into Britain, Russia and Latin America. Those foreign theaters could be sold.
Unknown is whether Redstone's daughter, Shari Redstone, supports the plan to carve up the theater chain that she runs. She owns 20% of National Amusements; her father owns 80%.
"At some point, his financial problems become hers," Vogel said.
For now, however, the 85-year-old Redstone has not agreed to relinquish his prized assets: controlling stakes in media companies CBS Corp., which owns the CBS network and Showtime; and Viacom Inc., which owns MTV and Paramount Pictures.
"Those are not on the table," said the person familiar with the proposal.
Last month, Redstone got caught in a credit crunch when turmoil on Wall Street pushed down the value of Viacom's and CBS' stocks. The falling share prices violated debt covenants of National Amusements' loans, and Redstone was forced to sell $233 million in nonvoting shares in the two companies.
Since then, the share prices of Viacom and CBS have plunged further, narrowing Redstone's options.
Some believe the Dec. 19 deadline for National Amusements to pay off the $800 million in bank loans could be pushed into next year. It is neither in the Redstones' nor the banks' interest to sell assets at fire-sale prices, said two people close to the holding company.
