Viacom Hits Watershed in Its Debt Plan

Viacom International Inc. said Thursday that it has reached a watershed in its financial health with a debt restructuring that gives it more money, lower interest costs and fewer restrictions.

Viacom International owns MTV, Showtime, the Movie Channel and distribution rights to “The Cosby Show,” “Roseanne” and “A Different World” as well as 14 cable-TV systems, five television stations and eight radio stations.

Viacom is 83% owned by National Amusements Inc., a movie theater owner that bought its stake for $460 million in cash and $2.8 billion in new and old debt in a leveraged buyout in 1987.

The company said the refinancing was made possible by an increase in the value of its assets and the flow of cash from its operations, marking the success of the buyout.

The 10-year agreement with Viacom’s bank lenders, led by Citibank with Bank of New York as co-agent, gives it up to $1.5 billion in unsecured bank loans and revolving credit. It does not have to pay any principal for three years.

The agreement permits the company to borrow an additional $500 million by issuing commercial paper backed up by a portion of the bank lending. Viacom will use part of the proceeds to retire $200 million of its $1.3 billion in outstanding junk bonds.

“The closing of this credit agreement is a watershed event for our company,” Sumner M. Redstone, chairman, and Frank J. Biondi Jr., president and chief executive, said in a joint statement.

“By terminating our old credit agreement we have left behind the restrictiveness of the LBO (leveraged buyout) structure and have put in place a more flexible capitalization,” they said.

The new agreement frees Viacom to issue more debt, which could be used for acquisitions. Spokesman Thomas Dooley said the company has not announced any plans, but added: “We do remain opportunistic.”