7 Banks Will Help Fund Paramount Bid for Time

Seven banks have each agreed to put up $1 billion in loans for Paramount Communications’ proposed takeover of Time Inc., bringing total loan commitments for the bid to $8 billion of the $14 billion that is needed, Paramount said Thursday.

While many Wall Street observers have believed that Paramount could raise the money, the commitments strengthen the company’s hand when Paramount and Time argue their case before the Delaware courts in two weeks. Paramount has challenged the legality of Time’s plan to acquire Warner Communications, contending that it was intended solely to block Paramount’s bid. Time has bitterly fought Paramount’s offer since it was made June 7 and sweetened last week.

Paramount said it has loan commitments from Bank of America, Security Pacific National Bank, Bank of Nova Scotia, Sumitomo Bank, Long Term Credit Bank of Japan, Chase Manhattan Bank and Toronto Dominion Bank. Citibank, which is leading the bank syndicate, earlier had committed to put up $1 billion.

In a statement, Paramount Chairman Martin S. Davis said the company has received “expressions of interest” from other banks for more than the $6 billion that is still required.

Meeting Shifted

Paramount plans to raise $15.6 billion in all, including $14 billion from bank loans and $1.6 billion through issuance of high-yield “junk bonds.” Of the total, $12.2 billion would be spent to buy Time’s 61 million shares outstanding, and the remaining $3.4 billion to refinance existing debt of the two companies, pay fees and expenses and provide working capital.

Time, meanwhile, prepared to hold an annual meeting at which some shareholders are expected to vent their anger at Time’s rejections of both Paramount bids. Time has shifted the location of the meeting from a 400-person-capacity auditorium at its headquarters in New York to a New York Hilton Hotel ballroom that can seat 1,000.

Unhappy shareholders won’t be able to take action at the meeting that would affect Time response to the bids. Four incumbent directors who are up for reelection are running unopposed and will win if they receive a single vote.

The dissidents haven’t been able to nominate their own directors because of a year-old bylaw requiring that nominations be made 90 days before an annual meeting. But some shareholders are expected to withhold their ballots, hoping that a large number of withheld ballots would be read as protest by the Delaware Chancellor William T. Allen, who is presiding over the court case.

Some May Boycott

“It’s the closest you can come to protesting,” said Robert A. G. Monks, president of Institutional Shareholder Services, which advises big shareholders how to vote. Monks has advised his clients not to vote their shares, believing that the Time board’s actions “might well be the nadir of shareholder rights.”

Other frustrated shareholders don’t plan to show up, because of the futility of a protest. “It would make me feel a lot better to get up and yell,” says Ron Baron, a money-manager and institutional broker in New York. “It would make me feel better sometimes to yell at my kids. But I don’t.”

Paramount shares, whipped Wednesday by speculation that Paramount might itself become a takeover target, declined $2 to $60.875. But 2.1 million shares traded hands, making Paramount the second most heavily traded stock on the New York Stock Exchange. Warner was off 75 cents to $60 on volume of 1 million shares; Time lost $1.50 to close at $155.75.