UPDATE 3-Redstone sells more Viacom, CBS stock to pay off debt
* Redstone to sell $945 million in CBS, Viacom stock
* Sales to help fully pay off National Amusements debt
* Will retain control of CBS, Viacom, core theater assets
* CBS affirms 2009 outlook; shares drop 1.3 pct (Adds details on pricing, underwriters)
By Paul Thomasch
NEW YORK, Oct 14 (Reuters) - Sumner Redstone plans to sell more than $945 million of stock in CBS Corp (CBS.N: 行情) and Viacom Inc (VIAb.N: 行情), two media companies he controls, to pay off loans that threatened to unravel the media mogul's empire.
Shares of both CBS and Viacom dropped initially after Redstone's announcement on Wednesday that he would use proceeds from the sales to help satisfy debt incurred by his private theater chain, National Amusements Inc.
But the losses were modest and analysts said Redstone's move could eventually benefit Viacom and CBS by settling questions about his debts.
"We believe that the sales will remove an overhang from the stocks and likely provide a buying opportunity for the most attractively priced stocks in major media," UBS analyst Michael Morris said in a note.
Shares of CBS, which also affirmed its 2009 forecast of operating income before depreciation and amortization, a key media yardstick, dropped 1.3 percent. They later rebounded and ended the day up 3.1 percent.
Shares of Viacom, owner of MTV and Paramount movie studio, among other media businesses, fell 1.6 percent, before reversing to finish the day up 0.7 percent.
Given that both stocks are up about 50 percent so far this year, Redstone, 86, picked an attractive time to sell, analysts noted.
That was hardly the case a year ago, when he sold $230 million in stock as his debt crunch worsened, spooking investors already concerned about the financial crisis.
"We do not expect these sales to scare the public market as much as last fall's," Miller Tabak analyst David Joyce wrote in a note, "as that was more of an incremental surprise in a market that was facing worse surprises every day."
This time around, Redstone, through his theater chain, National Amusements, will sell up to $602.3 million of Viacom shares and as much as $343.7 million in CBS shares, if over-allotment options are exercised. He will keep a controlling stake of more than 75 percent in each company.
National Amusements is offering Viacom stock at $28.25 apiece, at a 2.3 percent discount to its close of $28.91 on Wednesday. And it plans to sell CBS stock at $12 a share, now a 4.2 percent discount to Wednesday's close of $12.52.
GOOD TIMING
Redstone will also sell some of National Amusements' assets to raise additional funds.
His move comes just weeks before National Amusements had a $500 million debt payment coming due. Not only can Redstone now make that payment, he can wipe out all existing debt of the theater chain. It restructured about $1.6 billion of debt in February, extending the maturity to Dec. 31, 2010. [ID:N27334151]
But while Redstone will retain voting control in both CBS and Viacom, the sales take a bite out of his overall equity stake. The plan calls for him to sell all of his non-voting shares, plus a small portion of his voting shares in each. When completed, Redstone will have less than 10 percent of the equity in either company. 待续



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