Redstone Further Reduces Stake On Slot Machine Maker WMS

Sumner Redstone, through his privately held firm National Amusements Inc., cut his stake in slot machine maker WMS Industries Inc. (WMS) by an additional 60%.

Redstone lowered the WMS stake to 966,999 shares, or less than 2% of the company, from 2,414,955 shares, or 4.9%, according to a regulatory filing made Thursday. He also ended an agreement with WMS Chairman and CEO Brian Gamache that allowed Gamache to vote Redstone's shares.

The move continues a string of recent reductions that the chairman and controlling shareholder of Viacom Inc. (VIA) and CBS Corp. (CBS) has made to several investments he has held in the entertainment sector.

Earlier this year, he had sold 1.1 million shares of WMS. He also sold his 87% stake in Midway Games Inc. to investor Mark E. Thomas for $100,000. The games maker is now bankrupt and a group of creditors have sued Redstone, alleging that he pushed the company into bankruptcy with a "fraudulent transfer."

Representatives for National Amusements didn't respond to inquiries for this story, but the company has previously said the lawsuit is "completely without merit."

Redstone's National Amusements was forced by lenders to sell $233 million worth of non-voting stock in Viacom and CBS as the stock market plunged last fall amid the global financial crisis. The episode led to speculation that National Amusements would have to further liquidate its ownership and possibly its control over both companies.

In February, however, National Amusements reached agreement with creditors on a restructuring of its debt load, and shares of both Viacom and CBS have since recovered some losses. National Amusements is currently trying to sell part of its movie theater chain to raise cash.

On Wednesday, ratings agency Moody's Investors Service placed part of Viacom's debt on review for a possible upgrade, saying corporate governance-related concerns about its relationship with National Amusements have been alleviated as the National Amusements has not had to sell more of its stake at low prices. The firm also cited the potential for Viacom to reduce its own debt load.

For its part, Standard & Poor's Ratings Services revised its outlook on Viacom to stable from negative and pulled the media company's short-term rating off watch for downgrade, citing the company's improving financial position.

CBS, however, had its debt rating lowered by Standard & Poor's to one notch above junk last month because of the company's heavy exposure to weakened ad markets.

-By Nat Worden, Dow Jones Newswires; [phone]; [e-mail]