Golden Books shares up
Eisner's words raise stox 158% despite misinterpretaion
Bloomberg News attributed Disney's interest to its chairman, Michael D. Eisner, who was reported to have said his company "had talks" with Golden Books about a takeover.
On the strength of press reports citing the comments attributed to Eisner, Golden Books' stock soared 140% Wednesday to close at 75 cents a share.
Despite Golden Books' providing Bloomberg with a denial of being in "equity" talks with Disney on Thursday, the stock continued its ascent, rising 158% to close at $1.94 a share.
Sources at Disney and Golden Books both told Daily Variety that the idea of takeover talks was misconceived. One said he believed Eisner's remarks were incorrectly interpreted Tuesday at a New York cocktail reception that followed Disney's introduction of an Internet venture with Infoseek.
The Mouse House isn't completely uninterested in Golden Books, but its interest is as licenser.
The once-dominant children's book publisher, which has been licensing Disney characters for decades, promised Disney in 1997 it would deliver $47.5 million to extend its license another five years.
Golden Books' ability to pay all of its licensing fees has since been compromised by a liquidity crisis that late last year resulted in a missed interest payment on $150 million in debt.
That, in turn, has forced the company into negotiating with its creditors and, with the help of investment bank Allen & Co., committing to exploring "strategic alternatives."
Principal Life Insurance Co. is the largest holder of Golden Books' debt, having extended $43 million in credit. Principal investment manager Tom Luther called workout discussions with the publisher "constructive and productive" Thusrday, but declined to speculate when an agreement might be reached.
By comparison, Golden Books spokesperson Philip Galanes expressed optimism that "a restructuring" will be announced in mid-February, a full month before the next interest payment is due.
Even with its two-day climb, Golden Books stock is still many times below its annual high of $11.88.
The company's management continues to churn, meanwhile, while such high-profile directors as USA Networks chief Barry Diller and Lincoln Center Theater chairman Linda Janklow have stepped down.
The company's deteriorating fortunes have long cast a cloud over Golden Books chairman and CEO Richard Snyder, who with partners Diller and buyout firm Warburg, Pincus bought a controlling 37% stake in the publishing company for $65 million three years ago.
