Redstone's assurances

Just catching up on CBS's conference call this morning, when Executive Chairman Sumner Redstone called his recent sale of Viacom and CBS stock a rare event. The sale was related to a loan that his family-run company, National Amusements, had used to expand its movie theater chain. As explained by DealBook, the debt had covenants that were based on the value of CBS and Viacom shares, as well as cash flow from the movie theater business. Redstone said the sale was the result of "extraordinary circumstances." Here's what he said:

Now let me emphasize this was not something NAI wanted to do nor is it something that NAI intends to do again. Let me make it clear, certain, NAI has no intention of selling a single share of Viacom or CBS. Now there may be uncertainties all around us but one of the things I remain absolutely certain of, whatever actions were required in no way diminishes my optimism of CBS and Viacom. Furthermore, it should be obvious to all of you that the current stock prices of these two great companies does not come close to reflecting their underlying value.

Okay, I guess he means it, though nobody intends to break loan covenants. They happen because of events and circumstances above and beyond the control of the borrower. So Redstone's assurances might not mean much a skeptical investor. Still and all, CBS shares were up 8 percent today. The company reported a big third-quarter loss, but that was the result of a one-time charge. Here's the AP story.