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AMC closes curtain on planned IPO

The theater chain owner finds that buyers are unwilling to pay its $17-a-share minimum.

May 04, 2007|Josh Friedman | Times Staff Writer

Sometimes the show doesn't go on.

AMC Entertainment Inc. yanked its planned $789-million initial public offering from the stock market Thursday rather than cut the proposed share price in response to tepid investor demand at its asking price, analysts said.

It was the largest IPO to be scuttled this year, and the cancellation came on the heels of a chilly reception for newly public rival Cinemark Holdings Inc.

AMC's owners, led by private equity firms JPMorgan Partners and Apollo Management, had demanded at least $17 a share in the proposed sale of 39.5 million shares, but buyers wouldn't budge beyond $16, IPO analyst Ben Holmes said.

"The private equity guys rarely lose, but they brought this thing to market and the market spit it back, saying, 'No, thanks,' " said Holmes, who edits Morningnotes.com in Boulder, Colo. "They just couldn't find the buyers at this valuation."

Calls to Kansas City, Mo.-based AMC Entertainment weren't returned.

Holmes said strong summer box-office results -- if they come through as analysts expect -- could help AMC return to the market later this year or in 2008. The company has 5,340 screens at 382 locations.

The stock market's response to Cinemark's recent offering didn't help AMC, which owns both the Loews and AMC chains. Cinemark, based in Plano, Texas, went public at $19 a share April 23 and fell to $18.91 on its first trading day. The shares declined 33 cents Thursday to close at $18.10.

Holmes said investors were cautious in the wake of the Cinemark deal, which had been priced "aggressively" at the top of its expected range.

AMC's Wall Street underwriters, including Goldman Sachs Group Inc. and Citigroup Inc., had indicated an expected price range of $18 to $20 for Thursday's deal, but investor interest waned.

Private equity firms are trying to cash in on the investments they made in the theater business three years ago when the business was sagging. After three down years, movie attendance recovered in 2006. Box-office analysts are bullish this year with "Spider-Man 3" and other high-profile films opening.

AMC derives more revenue per screen than Cinemark or industry leader Regal Entertainment Group, Holmes said. But the company reported a loss from continuing operations of $189.1 million on revenue of $2.3 billion in the fiscal year that ended March 30.

josh.friedman@latimes.com

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