PARAMOUNT COMMUNICATIONS INC /DE/
8-K, 1994-03-17
MOTION PICTURE & VIDEO TAPE PRODUCTION
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                          SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C.  20549-1004



                                       FORM 8-K

                                    CURRENT REPORT


                        Pursuant to Section 13 or 15(d) of the
                           Securities Exchange Act of 1934


            Date of Report (Date of earliest event reported) March 2, 1994


                            PARAMOUNT COMMUNICATIONS INC.
                (Exact name of registrant as specified in its charter)


                   Delaware                  1-5404              74-1330475
          (State or other jurisdiction of   (Commission      (I.R.S. Employer
          incorporation or organization)    File Number)    Identification No.)


               15 Columbus Circle
               New York, New York                           10023-7780
          (Address of principle executive offices)           (Zip code)



          Registrant's telephone number, including area code (212) 373-8000



                                                                           
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<PAGE>
                                                                          2


          Item 1.  Changes in Control of Registrant
                   --------------------------------


                    On December 13, 1993, the Board of Directors of

          Paramount Communications Inc. (the "Company") adopted procedures

          (the "Bidding Procedures") for the purpose of considering

          proposals to acquire the Company.  Pursuant to the Bidding

          Procedures, from December 20, 1993 through February 1, 1994,

          Viacom Inc. ("Viacom") and QVC Network, Inc. ("QVC") submitted a

          series of bids for the Company.  After the initial round of

          bidding, the Company entered into a merger agreement with QVC. 

          Prior to the February 1 bidding deadline established by the

          Bidding Procedures, Viacom substantially improved its bid and

          the Company terminated the agreement with QVC and entered into a

          merger agreement with Viacom.

                    On February 1, 1994, both Viacom and QVC submitted

          their final proposals for the acquisition of the Company. 

          Viacom's proposal consisted of a tender offer (the "Viacom

          Offer") for approximately 50.1% of the outstanding shares of the 

          Company's Common Stock (the "Shares"), on a fully diluted basis, at 

          $107 per Share to be followed by a merger (the "Viacom Second-Step

          Merger") in which each remaining Share would be converted into

          the right to receive (i) 0.93065 shares of Viacom Class B Common

          Stock, (ii) 0.93065 Contingent Value Rights, (iii) 0.5 three-year

          Warrants to purchase Viacom Class B Common Stock, (iv) 0.3 five-

          year Warrants to purchase Viacom Class B Common Stock and (v)

          $17.50 in principal amount of 8% exchangeable subordinated

          debentures of Viacom.




<PAGE>
                                                                          3
                    QVC's proposal consisted of a tender offer (the "QVC

          Offer") for 50.1% of the outstanding Shares, on a fully diluted

          basis, at $104 per Share to be followed by a merger in which each

          remaining Share would be converted into the right to receive (i)

          1.2361 shares of QVC Common Stock, (ii) 0.2386 shares of a new

          series of 6% cumulative non-convertible exchangeable preferred

          stock and (iii) 0.32 ten-year Warrants to purchase QVC Common

          Stock.

                    At a meeting held on February 4, 1994, the Company's

          Board of Directors recommended that stockholders accept the

          Viacom Offer and reject the QVC offer.  At that time, the Company

          entered into an Amended and Restated Merger Agreement with Viacom

          (the "Restated Viacom Agreement").

                    As of midnight on February 14, 1994, approximately

          74.6% of the outstanding Shares, on a fully diluted basis, had

          been validly tendered pursuant to the Viacom Offer and not

          withdrawn.  As a result, pursuant to the Bidding Procedures, on

          February 15, 1994 Viacom waived certain conditions to the Viacom

          Offer and extended the offer until March 1, 1994 and QVC

          terminated the QVC offer.  Immediately after midnight on March 1,

          1994, all conditions to the Viacom Offer were deemed to have been

          satisfied and Viacom accepted for payment 61,657,432 of the

          Shares validly tendered and not withdrawn pursuant to the Viacom

          Offer, representing approximately 50.1% of the Shares on a fully 

          diluted basis.

                    Pursuant to the Restated Viacom Merger Agreement, a

          special meeting of the Company's stockholders will be called to

          act on the Viacom Second-Step Merger.  The approval of holders of







<PAGE>
                                                                          4
          a majority of all outstanding voting shares of both Viacom and

          the Company is required to approve the merger.  The approval by

          Viacom's stockholders is assured by means of a voting agreement

          between Viacom's parent corporation and the Company.  The

          approval by the Company's stockholders is assured because Viacom

          now owns a majority of the outstanding shares and a vote of such

          shares in favor of the merger is sufficient to ensure approval 

          thereof.

                    The Restated Viacom Merger Agreement also provides that

          consummation of the Viacom Second-Step Merger is subject to

          certain customary conditions.

                    The Restated Viacom Merger Agreement provides that, if

          requested by Viacom, the Company shall, promptly following the

          acceptance for payment of the Shares pursuant to the Viacom Offer

          take all action necessary to cause a majority of the directors of

          the Company to be comprised of the designees of Viacom.  On March

          10, 1994 ten of the members of the Company's Board of Directors

          resigned.  On March 11, 1994, ten designees of Viacom were

          elected to the Company's Board of Directors.  The Viacom

          designees elected to the Board are:

                              George S. Abrams
                              Frank J. Biondi, Jr.
                              Philippe P. Dauman
                              William C. Ferguson
                              H. Wayne Huizenga
                              Ken Miller
                              Brent D. Redstone
                              Sumner M. Redstone
                              Frederic V. Salerno
                              William Schwartz






<PAGE>
                                                                          5
                    In addition, five previous members of the Company's

          Board of Directors continue as directors.  These five individuals

          are:

                              Martin S. Davis
                              Irving R. Fischer
                              Ronald L. Nelson
                              Donald Oresman
                              James A. Pattison

                    Information concerning the sources of funds used in the

          Viacom Offer is set forth in the following documents which are

          incorporated herein by reference and which are attached hereto

          as exhibits:

                    1.   The text under the caption "Financing of the Offer

          and the Merger" which appears on pages 3-5 of the Second

          Supplement to Viacom's Offer to Purchase dated January 7, 1994,

          which was filed as Exhibit 99(a)(41) to Amendment No. 20 to

          Viacom's Schedule 14D-1 filed on January 7, 1994.

                    2.   The text under the caption "Financing of the Offer

          and the Merger" which appears on page 5 of the Third Supplement

          to Viacom's Offer to Purchase dated January 18, 1994 which was

          filed as Exhibit 99(a)(53) to Amendment No. 25 to Viacom's

          Schedule 14D-1 which was filed on January 18, 1994.
















<PAGE>
                                                                          6
          Item 7. Financial Statements and Exhibits 
                  ---------------------------------



           (b) Exhibits



               99(a)  -  The text under the caption "Financing of the Offer

                         and the Merger" which appears on pages 3-5 of the

                         Second Supplement to Viacom's Offer to Purchase

                         dated January 7, 1994, which was filed as Exhibit

                         99(a)(41) to Amendment No. 20 to Viacom's Schedule

                         14D-1 filed on January 7, 1994.

               99(b)  -  The text under the caption "Financing of the offer

                         and the merger" which appears on page 5 of the

                         Third Supplement to Viacom's Offer to Purchase

                         dated January 18, 1994 which was filed as Exhibit

                         99(a)(53) to Amendment No. 25 to Viacom's Schedule

                         14D-1 which was filed on January 18, 1994.
























<PAGE>
                                                                          7




                                      SIGNATURE

               Pursuant to the requirements of the Securities Exchange Act
          of 1934, the Registrant has duly caused this report to be signed
          on its behalf by the undersigned thereunto duly authorized.

                                   PARAMOUNT COMMUNICATIONS INC.



                                   By:Donald Oresman          
                                      ------------------------
                                      Donald Oresman
                                      Executive Vice President



          March 17, 1994








<PAGE>
                                                                          8

                                  INDEX TO EXHIBITS
                                  -----------------


          Exhibit Number
          --------------

             99(a)                 The text under the caption "Financing of
                                   the Offer and the Merger" which appears
                                   on pages 3-5 of the Second Supplement to
                                   Viacom's Offer to Purchase dated January
                                   7, 1994, which was filed as Exhibit
                                   99(a)(41) to Amendment No. 20 to
                                   Viacom's Schedule 14D-1 filed on January
                                   7, 1994.

             99(b)                 The text under the caption "Financing of
                                   the offer and the Merger" which appears
                                   on page 5 of the Third Supplement to
                                   Viacom's Offer to Purchase dated January
                                   18, 1994 which was filed as Exhibit
                                   99(a)(53) to Amendment No. 25 to
                                   Viacom's Schedule 14D-1 which was filed
                                   on January 18, 1994.



























 
     3. FINANCING OF THE OFFER AND THE MERGER. The discussion set forth in
Section 9 of the Offer to Purchase and Section 3 of the First Supplement is
hereby amended and supplemented as follows:
 

     The total amount of funds required by Purchaser to consummate the Offer and
the Merger and to pay related fees and expenses is estimated to be approximately
$6.6 billion.


     Purchaser has obtained $600 million of such funds from the issuance and
sale of 24 million shares of Purchaser's Series A Cumulative Convertible
Preferred Stock to Blockbuster. Purchaser has obtained $1.2 billion of such
funds from the issuance and sale of 24 million shares of Purchaser's Series B
Cumulative Convertible Preferred Stock to NYNEX Corporation ("NYNEX"). Purchaser
will obtain the remaining $4.8 billion of such funds from the bank credit
facility described below, from the sale of Viacom Class B Common Stock to
Blockbuster pursuant to the Blockbuster Subscription Agreement described below
or from other sources.

 

     Bank Financing. On November 19, 1993, Purchaser entered into a definitive
credit agreement (as amended by an amendment dated January 4, 1994, the "Credit
Agreement") pursuant to which the banks parties thereto (the "Lenders") agreed
to lend to Purchaser up to $4.8 billion (the "Bank Facility"), comprised of a
$3.7 billion senior unsecured 364-day revolving credit facility (the "Revolving
Facility") and a $1.1 billion term loan (the "Term Loan Facility"). The Lenders
made the following commitments to the Revolving Facility: Morgan Guaranty Trust
Company of New York, Citibank, N.A. and The Bank of New York (the "Managing
Agents"), $318,965,517.24 each; Bank of America National Trust and Savings
Association, The First National Bank of Boston, Bank of Montreal, The Chase
Manhattan Bank (National Association), Canadian Imperial Bank of Commerce and
Societe Generale, $159,482,758.62 each; Credit Suisse, The Fuji Bank, Limited,
Credit Lyonnais, Cayman Island Branch, The First National Bank of Chicago, The
Industrial Bank of Japan, Ltd., Mellon Bank, N.A., The Mitsubishi Bank, Ltd.,
Royal Bank of Canada, Shawmut Bank Connecticut, N.A., Nippon Credit Bank, Ltd.,
Los Angeles Agency, Sanwa Bank, Ltd. and Banque Paribas, $127,586,206.90 
each; and National Westminster Bank USA, National Westminster Bank, PLC, 
Union Bank and The Bank of Tokyo Trust Company, $63,793,103.45 each. Purchaser 
has terminated the Term Loan Facility in connection with obtaining the funds 
from NYNEX referred to above.

 

     The Credit Agreement provides that up to the full amount of the Revolving
Facility may be borrowed, prepaid and reborrowed until 364 days after execution
and delivery of the Credit Agreement, at which time all amounts outstanding
under the Revolving Facility will become due and payable.

 

     Purchaser may elect to borrow under the Bank Facility at either the Base
Rate or the Eurodollar Rate (each as defined below). The "Base Rate" would be
the higher of (i) Citibank, N.A.'s Base Rate and (ii) the Federal Funds Rate
plus 1/2 of 1%. The "Eurodollar Rate" would be the London Interbank Offered Rate
plus (i) 0.6875%, until Purchaser's long-term debt is rated by Standard & Poor's
Corporation ("S&P") or Moody's Investors Service, Inc. ("Moody's"), and (ii)
thereafter, a variable rate ranging from 0.2500% to 0.8750% dependent on the
senior unsecured long-term debt ratings assigned to Purchaser. The Eurodollar
Rate would be available for one, two, three or six month borrowings. Interest on
Base Rate borrowings would be payable quarterly in arrears. Interest on
Eurodollar Rate borrowings would be payable in arrears (i) at the end of each
applicable interest period and (ii) in the case of a period longer than three
months, every three months.



<PAGE>

     The Credit Agreement provides that Purchaser will pay each of the Lenders a
facility fee on such Lender's commitment in effect, from time to time, (whether
or not utilized) from the execution and delivery of the Credit Agreement until
the termination of the Bank Facility, payable quarterly in arrears, at the rate
of (i) 0.3125% per annum, until Purchaser's senior unsecured long-term debt is
rated by S&P or Moody's, and (ii) thereafter, a variable rate ranging from
0.1000% to 0.3750% dependent on the senior unsecured long-term debt ratings
assigned to Purchaser. The Credit Agreement provides that the obligations of
each Lender to make advances under the Bank Facility will be subject to the
satisfaction or waiver of the following conditions: (i) Purchaser shall have
acquired at least 50.1% of the Shares outstanding plus the Shares issuable upon
the exercise of the then exercisable Stock Options, as of the expiration of the
Offer; (ii) all regulatory approvals required for the consummation of the Offer
and the Merger shall have been obtained and be in effect (and all applicable
waiting periods relating thereto shall have expired), except (a) approval of the
Proxy Statement by the Securities and Exchange Commission and (b) approval of
the Long Form Application by the FCC; provided that no approval obtained to
consummate the Offer or that would be required from the FCC to consummate the
Merger would require the divestiture of the Shares, and provided that Purchaser
covenants to refrain from taking any action under the Voting Trust Agreement
that would result in the sale of the Shares and to take all actions with respect
to transfer applications before the FCC to assure that the Shares will not be
required to be sold by order of the FCC; (iii) certain representations and
warranties shall be true in all material respects as of the time of borrowing;
(iv) Purchaser shall be in compliance with the financial covenants contained in
the Credit Agreement; (v) there having been no material adverse change since
September 30, 1993 (except as publicly disclosed prior to October 26, 1993 or as
disclosed as of November 19, 1993 in the Merger Agreement) in the business,
financial condition, operations or properties, of Purchaser, the Company and
their respective subsidiaries considered on a pro forma basis taken as a whole;
(vi) no default or event of default under the Credit Agreement shall have
occurred and be continuing at the time of borrowing; (vii) no material
litigation shall be pending or threatened against Purchaser or a subsidiary in
which there is a reasonable probability of adverse decision which could have a
material adverse effect; (viii) the Merger Agreement, as amended, shall be in
full force and effect; and (ix) the Lenders shall have received certificates,
opinions of counsel and other documents satisfactory to the Lenders.

 

     Under the Credit Agreement, Purchaser has agreed to pay to the Lenders fees
customary for commitments of the type described herein as well as certain
out-of-pocket expenses of the Managing Agents arising in connection with the
preparation, execution and delivery of the Credit Agreement and the syndication
of the Bank Facility. In addition, Purchaser has agreed to indemnify each of the
Lenders and certain related persons against certain liabilities.

 
     The foregoing is a summary of the Credit Agreement and is qualified in its
entirety by reference to the Credit Agreement, a copy of which is filed as an
Exhibit to the Schedule 14D-1.
 


     Purchaser anticipates that the indebtedness incurred through borrowings
under the Bank Facility will be repaid from a variety of sources, which may
include, but may not be limited to, funds generated internally by Purchaser and
its subsidiaries (including, following the Merger, funds generated by the
Company), bank refinancing, and the public or private sale of debt or equity
securities. No decision has been made concerning the method Purchaser will
employ to repay such indebtedness. Such decision will be made based on
Purchaser's review from time to time of the advisability of particular actions,
as well as on prevailing interest rates and financial and other economic
conditions and such other factors as Purchaser may deem appropriate.
 

     Equity Financing. On January 7, 1994, Purchaser and Blockbuster entered
into a subscription agreement (the "Blockbuster Subscription Agreement")
pursuant to which Blockbuster has agreed to subscribe for and purchase from
Purchaser, and Purchaser has agreed to issue and sell to Blockbuster, (i)
22,727,273 shares of Viacom Class B Common Stock for an aggregate purchase price
of approximately $1,250,000,000 representing a purchase price of $55 per share.

                                       2
<PAGE>

     The obligation of each of Purchaser and Blockbuster to consummate such
purchase and sale is subject to (i) the other party having performed in all
material respects all of its obligations under the Blockbuster Subscription
Agreement and the accuracy in all material respects of the representations and
warranties made by such other party in the Blockbuster Subscription Agreement,
(ii) there being no judgment, injunction, order or decree which materially
restricts, prevents or prohibits the consummation of such purchase and sale,
(iii) the receipt of satisfactory legal opinions and (iv) Purchaser having
accepted for payment 50.1% of the Shares pursuant to the Offer.

 

     Purchaser has agreed that it will not make any material change in the
aggregate amount or forms of consideration to be paid in, or in any other
material terms and conditions of, the Offer and the Merger, without the prior
consent of Blockbuster, which consent shall not be unreasonably withheld.

 

     Pursuant to the Blockbuster Subscription Agreement, Purchaser has granted
Blockbuster customary registration rights with respect to the shares of Viacom
Class B Common Stock purchased thereunder.

 

     The Blockbuster Subscription Agreement requires each party to indemnify the
other and its affiliates, officers, directors, employees, agents, successors and
assigns for liabilities, losses, damages, claims, costs and expenses, interest,
awards, judgments and penalties arising out of or resulting from a breach of any
of such party's representations, warranties or covenants contained therein.

 

     In the event the Blockbuster Merger Agreement is terminated (other than by
Purchaser as a result of a breach of a representation, warranty, covenant or
agreement of Blockbuster contained therein), the Blockbuster Subscription
Agreement grants to Blockbuster certain rights in the event that Viacom Class B
Common Stock trades at levels below $55 per share during the one year period
after such termination. In the event that the highest average trading price of
the Viacom Class B Common Stock during any consecutive 30 trading day period
prior to the first anniversary of such termination of the Blockbuster Merger
Agreement is below $55 per share, Blockbuster shall be entitled to satisfaction
by Purchaser of a make-whole amount. Such make-whole amount may not exceed a
maximum amount equal to the sum of one half the number of shares of Viacom Class
B Common Stock purchased by Blockbuster under the Blockbuster Subscription
Agreement multiplied by the amount of such highest average trading price
deficiency not in excess of $4.40 and one half the number of such shares of
Viacom Class B Common Stock multiplied by the amount of such highest average
trading price deficiency not in excess of $19.80, resulting in a maximum
potential make-whole amount of $275 million.

 
     Under the Blockbuster Subscription Agreement, Purchaser is entitled to
satisfy its obligation with respect to any such make-whole amount, at
Purchaser's option, either through the payment to Blockbuster of cash or 
marketable equity or debt securities of Purchaser, or a combination thereof, 
with an aggregate value equal to the make-whole amount or, if the Merger has 
occurred, through the sale to Blockbuster of the theme parks currently owned 
and operated by the Company (the "Parks Business").

 

     In the event that Purchaser were to elect to fulfill its obligation to
satisfy the make-whole amount through the sale of the Parks Business to
Blockbuster, the purchase price would be $750 million, subject to adjustment for
certain capital expenditures, payable through delivery to Purchaser of shares of
Viacom Class B Common Stock valued at $55 per share. If the Parks Business were
so purchased by Blockbuster, the Blockbuster Subscription Agreement provides
that Blockbuster would grant an option to Purchaser, exercisable for a period of
two years after the date of grant, to purchase a 50% equity interest in the
Parks Business at a purchase price of $375 million, subject to adjustment for
certain capital expenditures, payable in cash.



                                       3




 
     3. FINANCING OF THE OFFER AND THE MERGER. The discussion set forth in
Section 9 of the Offer to Purchase, Section 3 of the First Supplement and
Section 3 of the Second Supplement is hereby amended and supplemented as
follows:

     The total amount of funds required by Purchaser to consummate the Offer and
the Merger and to pay related fees and expenses is estimated to be approximately
$6.7 billion.

     Purchaser has obtained $600 million of such funds from the issuance and
sale of 24 million shares of Purchaser's Series A Cumulative Convertible
Preferred Stock to Blockbuster. Purchaser has obtained $1.2 billion of such
funds from the issuance and sale of 24 million shares of Purchaser's Series B
Cumulative Convertible Preferred Stock to NYNEX Corporation ("NYNEX"). Purchaser
will obtain the remaining $4.9 billion of such funds from the Bank Facility,
from the sale of Viacom Class B Common Stock to Blockbuster pursuant to the
Blockbuster Subscription Agreement or from other sources.




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