Majority Stake in Orion to Be Sold to Metromedia

Orion Pictures Corp., which produced the recent box-office hits “No Way Out” and “Robocop,” will get a new majority owner in Metromedia Co. of Secaucus, N.J.

Orion announced Friday that Metromedia has agreed in principle to purchase the Orion common stock and warrants that currently are controlled by Sumner M. Redstone, the chairman of Viacom International and its parent theater chain, National Amusements. The purchase price was $17 per share and $11 per warrant.

The $78.3-million deal will give Metromedia--a partnership owned by entrepreneur John W. Kluge and Stuart Subotnick--a 66.6% stake in New York-based Orion. The agreement also effectively ends a 1 1/2-year stock-accumulation duel between Redstone and an investor group led by Metromedia Chairman Kluge.

A spokesman for Viacom said Friday that the money from the stock sale will “be used for general business purposes and for the reduction of Viacom’s bank debt,” which the spokesman put at $2.375 billion.

‘Magic Number’

For Kluge and his group, the stock purchase means one of two things, according to Lisbeth R. Barron, an analyst for the New York investment firm of Balis Zorn Gerard.

“Kluge can now add his shares to those of Orion Chairman Arthur Krim, a longtime friend of his, and tender for the rest (of the outstanding shares) in order to take the company private, in which case he would have to pay a premium to current market price.

“Or he can remain with his 66.6% ownership and pour money into the company and make acquisitions--use it as a vehicle to build a conglomerate,” Barron said.

The analyst noted that the 66.6% stake was a “ ‘magic number’ that’s required to get approval to vote for acquisitions and mergers.”

Formerly a publicly held entertainment conglomerate, Metromedia was taken private by Kluge in 1984. Since then, the company has sold off several billion dollars worth of assets, including seven television stations, nine radio stations, a billboard advertising firm, the Ice Capades, the Harlem Globetrotters and 15 ice-skating rinks. The company’s largest remaining businesses are its long-distance telephone services in New York, Boston, Miami and the Baltimore-Washington area.

Stock Drops Slightly

Analyst Barron put Metromedia’s total investment in Orion at “between $175 million and $200 million, which is really small change for Kluge.”

Redstone’s stake in Orion consisted of 2.819 million shares of common stock and 2.762 million warrants to purchase shares. The warrants can be converted into common stock for $6 a share.

If the announced purchase is completed, Metromedia will hold 10.155 million Orion shares, plus 4.194 million warrants.

Orion stock closed Friday at $15 a share, off 12.5 cents, on the New York Stock Exchange. In the past year, it has traded as low as $5.50 a share and as high as $19.50.