Saving Sumner Redstone’s empire

This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.

Now the bankers can begin measuring the drapes at CBS Corp.

Sumner Redstone and his privately held family investment firm, National Amusements Inc., has negotiated its way out of a colossal credit jam, finalizing its debt restructuring.

But the media tycoon might not be able to hold on to his vast empire forever. In regulatory filings today, CBS and Viacom Inc. separately reported that Redstone’s preferred and common stock in the two media companies has been used to secure Redstone’s $1.46-billion debt.

The proposed deal with lenders, which was initially announced in February, requires that Redstone’s National Amusements repay its entire debt by Dec. 31, 2010. Payments are due later this year and next year.

National Amusements is looking to sell off much of its chain of movie theaters to come up with cash to make the debt payments. It has more than 1,500 theaters in the U.S., United Kingdom, Russia and Latin America. But not everyone thinks that divesting the cinemas alone will generate enough money to retire the debt.

Redstone, who turns 86 later this month, also holds the controlling stakes in Viacom and CBS. The companies’ stock has seen a boost in recent weeks. CBS closed trading today at $7.33 a share -- nearly double its price in mid-March when it was trading below $4 a share. Viacom closed at $20.32, which is 60% higher than the stock’s low mark of about $12 a share back in November, when the magnitude of Redstone’s credit troubles became known.

If the shares continue to climb in value, that will give Redstone a greater resource to pay off the debt without a wholesale liquidation, particularly of his beloved Viacom.

-- Meg James