Shari Redstone’s National Amusements, Inc. (NAI) has amended its borrowing terms as an alternative to selling shares of ViacomCBS.
NAI had been in violation of previous agreements as the value of its ViacomCBS holdings, a key part of the umbrella company’s collateral against those loans, have declined amid the coronavirus pandemic.
ViacomCBS is certainly not alone as a media company with a struggling stock price these days. Those declines, coupled with the large number of shares held by National Amusements, put the Redstone firm below a previously agreed upon threshold — one from much different economic times.
Under the revised agreement, National Amusements will have a revolving line of credit of $125 million and “ample liquidity.” That is “in addition to its substantial cash reserves, to fund operations of NAIEH, which includes its theater business,” the company said on Thursday.
NAI had until Saturday to address its violation. Done and done, it seems.
National Amusements, Inc. operates more than 950 movie screens in the U.S., U.K. and Latin America under its Showcase, Cinema de Lux, Multiplex, SuperLux and UCI brands. It is based in Norwood, Mass. and has been in the Redstone Family for three generations.
Shares in ViacomCBS, the recombination of Viacom and CBS from late last year, have more than halved since mid-February. On Feb. 19, 2020, the stock was trading at $35.67 per share. At the time of this writing, shares were around $14 apiece.
National Amusements holds 79.4% of the Class A (voting) common stock of ViacomCBS, and 10.2% of Class A and Class B common stock combined.
Movie theaters have been hit hard by the shutdowns due to COVID-19, though there is some hope on the horizon in the form of a stimulus package. The bill includes a combination of direct payments to individuals, increased funding for unemployment and an expansion of who qualifies, and billions for large and small businesses affected by shutdowns across the country.
“We applaud the bipartisan agreement reached in the Senate today to provide relief to movie theaters their employees and so many other public-facing industries that have had to close their doors due to the COVID-19 pandemic,” the National Association of Theater Owners said in a statement last night. “With this agreement, movie theaters can look forward with confidence to re-opening and once again serving their communities when this crisis has passed.”
The lobby group representing exhibitors specifically praised the bill’s $454 billion loan guarantee fund, expanded SBA programs for small businesses, a deferral of payroll taxes and other tax breaks, the tax credit for businesses that retain their workforce during the shutdown, and the expanded unemployment benefits.
“With this aid, movie theaters can get through this crisis confident in being able to re-open, knowing their vital, trained workforce is able to weather this pandemic and have jobs waiting for them when it is safe to reopen,” the group’s statement added.