Viacom International's lead banks on Friday will reveal details of a roughly $7 billion refinancing to some 30 banks invited to participate in the deal as agents and coagents.
The new credit will replace existing bank debt, including a $3.7 billion bridge loan that helped finance Viacom's winning bid for Paramount Communications Inc. earlier this year.
Bank of New York, Citibank, and Morgan Guaranty Trust Co. led the bridge loan and will also lead the refinancing. Bank of America has been added as the fourth managing agent, soruces said.
Other banks lobbied for a lead role. The selection of Bank of America probably was influenced by its position as lead bank for Blockbuster Entertainment Corp., which agreed in January to be acquired by Viacom in a stock transaction.
Blockbuster also invested in Viacom's bid for Paramount through the purchase of Viacom preferred stock, which was financed with a short-term $1 billion loan led by Bank of America.
Merger in Doubt
Armed with Blockbuster's strong cash flow, Viacom would have an easier time servicing its Paramount acquisition debt. But consummation of the Viacom-Blockbuster merger remains in doubt because of a slide in Viacom's stock price.
Late last month, Standard & Poor's Corp. said the debt ratings of Viacom, Blockbuster, and Paramount were under review for possible downgrades. S&P cited doubts about the Blockbuster-Viacom merger.
S&P said Viacom's implied senior debt rating of BBB-minus probably would be lowered to BB or BB-plus if the Blockbuster merger does not take place.
Viacom, meanwhile, confirmed this week that it is exploring the sale of its Madison Square Garden operations in New York, which would include the sports complex and its resident basketball and hockey teams -- the Knicks and Rangers.
Proceeds from this and other possible asset sales would help ease Viacom's debt burden.
Terms of the new deal have been kept under wraps, but pricing is said to be comparable to the $3.7 billion bridge loan.