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United Artists Theaters File for Chapter 11

September 06, 2000|From Bloomberg News

WILMINGTON, Del. — United Artists Theatre Co. filed for bankruptcy protection from creditors after failing to repay $12.3 million to bondholders this year and announcing a debt-restructuring plan.

The Englewood, Colo.-based company listed $521.9 million in assets and $667.6 million in debts in its Chapter 11 petition in U.S. Bankruptcy Court in Wilmington, Del. The filing is just the latest by movie theater chains staggering from competition with the Internet and megaplex movie houses.

Last month, Carmike Cinemas Inc., the third-largest U.S. theater operator, also sought protection from creditors in Delaware, as did Newport Beach-based Edwards Theatres Circuit Inc.

United Artists' internal cost-cutting plan failed to "mitigate the impact of the unprecedented level of predatory [expansion] that has occurred in our industry over the past three years," said Kurt Hall, United Artists' president and chief executive, in a release. United Artists is the country's sixth-largest theater chain.

United Artists officials have been in negotiations for months with creditors, including Denver billionaire Philip Anschutz, to swap their claims for shares of the reshuffled company as part of a so-called prepackaged bankruptcy.

Anschutz will receive 55% of United Artists' new shares in exchange for his claims, company officials said in the release. Anschutz reportedly paid about $65 million for 21% of a $440-million syndicated loan to United Artists, making him the company's single largest investor.

Anschutz bought up United Artists' bank loans after the company defaulted on $275 million in bonds. Hall said in an interview that Anschutz is giving up $92 million in claims for shares.

The plan calls for other lenders, including banks owed $349 million, to get 29% of United Artists' reshuffled shares while bondholders owed $275 million will get warrants allowing them to buy about 7% of the shares, Hall said. The other 10% of the shares will go to company executives, he said.

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