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  • Viacom exchange offer for Blockbuster split-off oversubscribed

    Viacom exchange offer for Blockbuster split-off oversubscribed

    MUMBAI: Viacom Inc. announced that, based on preliminary results, its exchange offer for the split-off of Blockbuster Inc. was oversubscribed.

    The final results to be announced on or before 13 October.

    The successful offer to Viacom stockholders for the exchange, on a tax-free basis, of some or all of their Viacom shares for shares of Blockbuster common stock held by Viacom expired at 12:00 midnight, New York City time, on October 5, 2004.

    Based on a preliminary count by the exchange agent, The Bank of New York, 294,926,641 shares of Viacom common stock, consisting of 4,648,793 shares of Viacom class A common stock and 290,277,848 shares of Viacom class B common stock, were tendered for exchange. Of these shares, 150,315,329 shares of Viacom common stock, consisting of 1,287,577 shares of Viacom class A common stock and 149,027,752 shares of Viacom class B common stock, were tendered by notice of guaranteed delivery, says a company release.

    Viacom will accept for exchange 27,961,165 shares of Viacom common stock in exchange for the 72 million shares of Blockbuster class A common stock and 72 million shares of Blockbuster class B common stock Viacom owns. Because the exchange offer is oversubscribed, Viacom will accept only a portion of the number of shares of each class of Viacom common stock that were tendered, on a pro-rata basis in proportion to the number of shares tendered, says the release.

    Based on the preliminary results, and assuming all shares tendered by notice of guaranteed delivery are delivered under the terms of the exchange offer, Viacom will accept approximately 9.5 per cent of the tendered shares of each class of Viacom common stock. Viacom expects to announce the final results of the exchange offer, including the final proration factor, on or before Wednesday, 13 October 2004.

    Stockholders that have tendered less than 100 shares, or an odd-lot, will not be subject to proration, except that stockholders that have tendered odd-lots as a participant in a Viacom or Blockbuster employee benefit plan are not entitled to this preference.

    Viacom commenced the exchange offer on 8 September 2004 and offered to exchange 5.15 shares of Blockbuster stock, consisting of 2.575 shares of Blockbuster Class A common stock and 2.575 shares of Blockbuster Class B common stock, for each share of Viacom common stock validly tendered and not properly withdrawn, up to an aggregate of 27,961,165 shares of Viacom class A or class B common stock.

    Shares of Blockbuster common stock will be credited to accounts of tendering stockholders by the exchange agent promptly after the final results of the exchange offer are announced. In addition, checks in lieu of fractional Blockbuster shares and shares of Viacom class A and class B common stock tendered but not accepted for exchange are expected to be delivered or mailed on or before 22 October 22, 2004, adds the release.

  • Viacom-Blockbuster head for splitsville

    Viacom-Blockbuster head for splitsville

    MUMBAI: Viacom and Blockbuster have jointly announced terms of separation. The divestiture is to be achieved through split-off exchange offer to Viacom stockholders.

    The registration statement was filed with the Securities and Exchange Commission, yesterday.

    Prior to the commencement of the exchange offer, Blockbuster anticipates paying a pro rata special cash distribution of $5 per share, or a total of approximately $905 million based on the number of shares currently outstanding, to all stockholders, including Viacom.

    According to an official release, as the owner of approximately 81.5 per cent of Blockbuster’s outstanding shares, Viacom anticipates receiving a cash payment of $738 million in the distribution free of income taxes.

    JPMorgan, Citigroup and Credit Suisse First Boston have offered Blockbuster a financing commitment for a new $1.45 billion credit facility subject to customary conditions. It will be used to finance the special distribution and replace Blockbuster’s current revolving credit facility.

    Viacom expects the divestiture to be completed in the third quarter of 2004, says the release.

    A special committee of independent directors of Blockbuster has unanimously recommended the credit facility, payment of a $5 per share cash distribution (subject to certain conditions), certain inter-company arrangements and the filing of the Blockbuster registration statement. In addition, both the Viacom and Blockbuster boards have approved the exchange offer and the inter-company arrangements, informs the release.

    According to Viacom chairman and chief executive officer Sumner Redstone, “Viacom’s separation from Blockbuster is a major event that begins a new chapter in the Viacom growth story and brings significant advantages for both companies as we pursue our separate paths to success. Following the split-off, Viacom will devote all its energies and resources into expanding in core areas, particularly the content creation engines that we believe will drive our future performance. The split-off, which is also expected to result in a reduction of Viacom’s outstanding shares, enables Blockbuster to focus on its mission to become a specialty retailer of home entertainment.”

    While Blockbuster’s chairman and CEO John Antioco offered, “We are pleased to be moving forward with our split-off from Viacom, and we believe that by becoming a separate company we will be better able to pursue our retailing strategy. Additionally, we believe issuing a special cash distribution will offer value to our stockholders without inhibiting us from executing our business plan.”

    The exchange offer will provide Viacom stockholders with the opportunity to exchange, on a tax-free basis, some or all of their shares of Viacom Class A or Class B common stock for shares of Blockbuster Class A and Class B common stock held by Viacom. The exchange ratio for the exchange offer will be set prior to the commencement of the exchange offer, informs the release.

    Viacom currently owns 144 million shares of Blockbuster Class B common stock. Viacom has agreed to ensure the tax-free nature of the exchange offer and convert a portion of these shares of Blockbuster Class B common stock, on a one-for-one basis, into shares of Blockbuster Class A common stock prior to the completion of the exchange offer.

    As a result of this conversion, the outstanding Blockbuster common stock after completion of the exchange offer is currently expected to consist of approximately 60 per cent Blockbuster Class A common stock and 40 per cent Blockbuster Class B common stock. After the transaction is completed, the number of votes per share of Blockbuster Class B common stock will be reduced from five votes per share to two votes per share, informs the release.