In a strategic move to alleviate debt, National Amusements Inc., the holding company controlled by the Redstone family and overseeing media giant Paramount Global, has secured a significant investment of $125 million from BDT Capital Partners, a firm co-founded by computer billionaire Michael Dell.
National Amusements aims to utilize this preferred equity investment to pay off existing revolving loans and other borrowings, resulting in a reduction of interest expenses. The infusion of capital will also position the company for sustainable growth and aid in its post-pandemic recovery, as stated in an official company statement.
Once the debt is repaid, National Amusements will regain ownership of the shares of Paramount Global that were pledged as collateral to support the loans. This reinstatement will reinforce the company’s assets and bolster its financial standing.
Paramount Global, the parent company of prominent television networks such as CBS and MTV, recently encountered challenges due to diminishing sales in its traditional channels and losses in its streaming business. In response, the company made the decision to reduce its dividend by a staggering 80% earlier this month.
Shari Redstone, the CEO of National Amusements and chair of Paramount, remains confident in the media company’s streaming strategy, expressing the family’s unwavering conviction that it will ultimately prove successful. Redstone’s vision for the future underscores her commitment to the ongoing development of the company.
National Amusements also encompasses the original source of the Redstone family’s wealth—a chain of movie theaters established by Shari’s grandfather, currently operating an impressive 837 screens. However, on May 15, S&P Global downgraded the credit rating of National Amusements due to its heavy dependence on the Paramount dividend. S&P Global predicts a decline in income from this source, projecting a decrease from $61 million in 2022 to $13 million next year as a direct result of the dividend cut.
S&P Global’s assessment reveals that National Amusements currently holds a revolving loan of $75 million and term loans totaling $305 million. Taking into account the current refinancing, the company is projected to break even this year but potentially incur losses of up to $35 million in 2024. The deal with BDT Capital Partners is expected to conclude next week, marking a significant milestone for National Amusements’ financial restructuring.
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BDT Capital Partners, an affiliate of BDT & MSD Partners, a merchant bank established by Dell in collaboration with financier Byron Trott, specializes in offering guidance to family businesses and founder-led companies. For approximately a year, the firm has been working closely with National Amusements, fostering a partnership rooted in mutual understanding and support, according to reliable sources.
Following the announcement, shares of Paramount Global experienced a surge, with an increase of up to 7.5% to $15.13 during extended trading. Despite this positive development, the stock has witnessed a 17% decline over the course of this year until the close of Thursday’s trading session in New York.
National Amusements Secures Investment to Propel Post-Pandemic Recovery
As National Amusements secures a substantial $125 million investment from BDT Capital Partners, the Redstone family’s holding company, Paramount Global’s parent company, is poised for a path of sustainable growth and post-pandemic recovery.
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In summary, National Amusements Inc., the Redstone family’s holding company, has received a significant $125 million investment from BDT Capital Partners, co-founded by computer billionaire Michael Dell. This investment will enable National Amusements to repay debt, reduce interest expenses, and position itself for sustainable growth and recovery. With the support of BDT Capital Partners, National Amusements and its subsidiary, Paramount Global, are optimistic about their streaming strategy and confident in their ability to overcome current challenges in the media industry.