Sumner Redstone Trust Restricts Sale Options for CBS, Viacom--Update
August 09 2018 - 12:45PM
Dow Jones News
By Keach Hagey
Breaking News...
Sumner Redstone doesn't want his heirs to have an easy time
selling off his family's controlling stakes in media companies
Viacom Inc. and CBS Corp. And he put it in writing in his estate
planning documents.
The trust that will control Viacom and CBS when the 95-year-old
media mogul dies or is deemed incapacitated places severe
restrictions on the trustees' ability to sell the companies,
according to a copy of the trust reviewed by The Wall Street
Journal.
The confidential trust, details of which haven't been disclosed
previously, prohibits the trustees from entering into any merger
that would leave National Amusements shareholders with any less
than 30% of the voting control of the resulting company, according
to the documents.
That could complicate efforts to sell CBS or Viacom, especially
to large companies, where coming away with a substantial
stakeholding would be challenging.
That and other provisions of the trust may have significant
implications for CBS and Viacom investors, particularly at a moment
when the media industry is awash in deals and both those companies
are considered potential takeover targets.
The Sumner Redstone trust emerged as a flashpoint in the legal
battle playing out in Delaware Chancery court between CBS and
National Amusements over control of the media company.
CBS is pushing to dilute National Amusements from a nearly 80%
voting stakeholder to a roughly 20% stake through a special
dividend. National Amusements moved to block a special dividend by
changing CBS's bylaws to require a 90% supermajority for such a
change. The two sides have been going through procedural
proceedings thus far, and a trial in the case is set for
October.
At a court hearing Wednesday, CBS lawyer Joseph Allerhand said
only a handful of people have laid eyes on the trust document.
"We believe there are terms of the trust that are fairly
described as bombshells," Mr. Allerhand told the judge, without
specifying what the provisions were. He added that it has "huge
consequences to investors of this company."
He pointed to a specific section of the trust document, but
didn't spell out in court he contents of that section. That
sections deals with the restrictions on selling National Amusements
or its assets after Mr. Redstone dies or is deemed incapacitated,
according to the documents the Journal reviewed.
The provision also spells out that Mr. Redstone has the "sole
and exclusive power" to vote the stock in the trust during his
lifetime. Mr. Redstone's trust owns 80% of the voting stock of
National Amusements, while Shari Redstone, his daughter, owns 20%.
National Amusements, in turn, owns nearly 80% of the voting stock
of CBS and Viacom.
National Amusements has said it decides how to vote the holding
company's CBS and Viacom controlling stakes through a vote of its
seven-member board, on which Mr. Redstone casts a single vote.
However, Mr. Redstone has the right to replace all members of the
board.
Peg Brickley contributed to this article.
(More to Come)
(END) Dow Jones Newswires
August 09, 2018 13:30 ET (17:30 GMT)
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