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Regal Cinemas Considers Restructuring

November 16, 2000|From Reuters

NEW YORK — Top U.S. theater operator Regal Cinemas, which has been struggling with an industry glut, is considering bankruptcy or other financial restructuring after a series of acquisitions left it with more than $1 billion in debt.

Regal said in a Securities and Exchange Commission filing that it retained financial advisors to help develop a restructuring plan that could involve closing underperforming theaters and selling nonstrategic assets.

The plan also could lead to recapitalization or bankruptcy reorganization, Regal said. The company reported total assets of $2.11 billion and outstanding debt of $1.02 billion.

Closely held Regal, based in Knoxville, Tenn., could become the latest victim of the "overscreening" of America, with new movie screens outpacing the growth of attendance levels.

Several major theater operators, including Carmike Cinemas Inc., Edwards Theatres Circuit Inc. in Newport Beach, the parent of General Cinema Theaters Inc. and United Artists Theatre Circuit Inc., have filed for bankruptcy protection.

And, in another sign of trouble, Carmike Cinemas on Wednesday reported a loss of 18 cents per diluted share after a profit of 68 cents per share in the same period last year.

Regal was bought in 1998 by Kohlberg Kravis Roberts & Co. and Hicks, Muse, Tate & Furst and combined with other cinema assets. The company then began building new movie screens, taking on debt as it went.

Regal has 4,472 movie screens at 413 theaters, primarily in the eastern and northwestern United States.

Poor market conditions caused by an oversupply of state-of-the-art movie theaters has led to deteriorating operating results, the company said.

Regal is in technical default of certain financial covenants, giving lenders the right to accelerate the maturity of all their outstanding loans, according to the filing.

The company said it cannot fund its debt if its lenders choose to accelerate the debt's maturity.

Regal also said it expects to incur legal and professional fees and other restructuring costs this year and 2001.

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