Restructuring of Multimedia Is Under Way

Multimedia said Thursday that it has set in motion a plan developed by an investor group of senior management and the founding families to recapitalize the company.

The plan would allow shareholders to cash in their shares and, for a small investment, retain some equity in the company.

The proposal, valued at $890 million, must still be cleared by the Securities and Exchange Commission.

It will be put before the shareholders in a June meeting in Greenville, and approval requires a two-thirds vote. The company said it will not carry out the transaction unless a majority of the shares held by the public are voted in favor of it.

Multimedia is a media communications company that publishes 14 daily and 29 non-daily newspapers, owns and operates five television and 10 radio stations, operates more than 100 cable-television operations in four states and produces and syndicates television programming, including “The Phil Donahue Show.”

The company’s board approved the recapitalization plan last week, and it was executed by management Wednesday night.

Conversion Plan

“We feel very optimistic and hopeful that this will move along as planned,” said Donald Barhyte, Multimedia’s chief financial officer.

Under the recapitalization plan, the stock controlled by the management investor group would increase from 40% to 45%, Barhyte said.

The agreement provides that each share of Multimedia common stock may be converted into the right to receive $41.24 in cash and $26.54 principal amount of a new issue of the company’s 16% subordinated discount debentures.

Shareholders could retain an equity interest in the company by giving up $5.27 of the cash consideration for each share.

There is also a provision for those wanting only debentures for their shares.

Since the plan has been under consideration, there have been three proposals from outside interests to take over the company. Senior management and members of the Peace, Jolley, Sisk and Furman families have repeatedly stated their intention to keep the company under the current ownership.

Washington Redskins owner Jack Kent Cooke, who owns 9.7% of Multimedia’s stock with his affiliates, said last week that he had offered $63 per share, or $1.052 billion, for about 16.7 million shares of outstanding common stock. Multimedia said it was not interested.

Earlier expressions of interest were made by Lorimar Productions, which has since withdrawn its $61-a-share offer, and by Wesray, a New Jersey investment concern headed by former Treasury Secretary William E. Simon that had proposed $60 a share.

Wilson Wearn, chairman of Multimedia’s board, said the recapitalization would allow all shareholders to “stay with the company” and at the same time receive substantial payments on their investment.

“That’s the real attraction . . . that you can take the cash and still have an equity interest,” Barhyte said.