😎 Summer Sale Exclusive - Up to 50% off AI-powered stock picks by InvestingProCLAIM SALE

Paramount Global shares rise as major shareholder gets $125 million investment deal

Published 05/26/2023, 12:40 PM
Updated 05/26/2023, 03:38 PM
© Reuters. FILE PHOTO: Toy figures of people are seen in front of the displayed Paramount + logo, in this illustration taken January 20, 2022. REUTERS/Dado Ruvic/Illustration/

By Medha Singh and Chibuike Oguh

NEW YORK (Reuters) - Shares of Paramount Global rose by more than 6% on Friday after its controlling shareholder, media mogul Shari Redstone's National Amusements Inc, announced it had received a $125 million investment from a private equity firm.

National Amusements said it had agreed a $125 million preferred equity investment from BDT Capital Partners to help the U.S. movie theater operator cut its interest expense and pay down borrowings, according to a statement on Thursday.

BDT Capital Partners, which is a private equity firm backed by Dell Inc founder Michael Dell and billionaire investment banker Byron Trott, will be issued warrants to purchase 3.5 million of Paramount Global's non-voting shares owned by National Amusements at a strike price of $15 as part of the deal, the Wall Street Journal reported.

"The bull case is that the financial pressure will force PARA [Paramount Global] to find a buyer and shareholders will achieve private market value," Loop Capital analysts said as they upgraded the stock to "hold" from "sell".

Paramount Global shares, which have lost 12% year-to-date, rose 6.1% and were trading at $14.94 around noon on Friday.

Earlier this month, Paramount Global, one of National Amusements' biggest assets and its main cash cow, missed first-quarter revenue estimates and cut its dividend by 80% in an effort to save approximately $500 million, prompting multiple analysts to downgrade the company's target stock price.

© Reuters. FILE PHOTO: Toy figures of people are seen in front of the displayed Paramount + logo, in this illustration taken January 20, 2022. REUTERS/Dado Ruvic/Illustration/

Paramount Global has been looking to sell some its assets to raise capital amid a weak advertising market that has hit its TV business. The company is considering the possible divestment of its majority stake in BET Media Group and it is attempting another sale of book publisher Simon & Schuster, Reuters reported.

(This story has been refiled to clarify reference to BDT Capital Partners in paragraph 3)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.