Theater chain files bankruptcy papers-- General Cinema joins growing list of theater operators asking for protection

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Theater chain files bankruptcy papers-- General Cinema joins growing list of theater operators asking for protection

Source: The Kansas City Star Publication date: 2000-10-12

Another movie exhibition company bit the bankruptcy bullet Wednesday when General Cinema Theaters Inc.'s parent company filed for Chapter 11 protection.

The filing by GC Cos. marks at least the seventh exhibition company since May to seek protection from creditors while reorganizing.

Kansas City-based AMC Entertainment Inc., standing by while its exhibition brethren take the Chapter 11 plunge, continues to insist that it won't go that route.

Just last week, Mission-based Dickinson Theatres Inc. filed for Chapter 11, saying it was experiencing a cash-flow crunch. Dickinson executives told the bankruptcy judge overseeing its case that a $1.2 million loan provided by The Mission Bank would give it the breathing room it needs to make it through the end of the year.

General Cinema, based in Chestnut Hill, Mass., runs no theaters in the Kansas City area.

On the surface, GC's filing, which lists assets of $328.9 million and liabilities of $195.1 million, appears to be a similar bid to buy time and close money-losing theaters.

The spate of filings comes as the industry tries to digest the vastly overbuilt market in the face of declining movie attendance. The overbuilding started in 1995 when AMC opened a 24-screen megaplex in Dallas. The industry's first Chapter 11 filing came in May when Silver Cinemas, a Dallas-based art-film circuit with about 82 theaters, sought bankruptcy protection. Next, surprisingly, came Carmike Cinemas, which blinked first in a dispute with its lenders and was then forced to file.

Carmike has been followed by United Artists, Mann Theatres, Edwards Cinema, Dickinson and now General Cinema.

AMC Entertainment is the largest chain in North America in terms of revenue and third in screen count. Carmike and United Artists are among the six largest circuits in North America.

Rounding out the top six are Regal Cinemas, the largest in terms of screens; Cinemark, considered AMC's most formidable competitor; and Loews Cineplex Entertainment.

Both Regal, which is a series of circuits cobbled together by Kohlberg Kravis Roberts & Co. and Hicks Muse Tate & Furst Inc., and Loews are in talks with their bankers and have said they will probably violate lending covenants.

One or both are expected to file Chapter 11 within two to three weeks if talks with their lenders prove fruitless.

Meanwhile, AMC spokesman Rick King said Wednesday that there was no change in AMC's stance. The company is digging in its heels and hanging on.

AMC's stock closed Wednesday at a 52-week low of $1.56, down 12 cents. Trading volume was 1.6 million shares, more than 20 times its average daily trading volume.

The generally accepted benefits of Chapter 11 are the ability to reject leases on money-losing locations and to discharge large chunks of debt owed to bondholders and banks.

Some Wall Street analysts wonder what would happen if all or most of AMC's largest competitors went through Chapter 11 and AMC didn't. Does that better position the fresh-start companies to compete against AMC?

"I think that depends on how good a job we've done working through our inventory of old theaters, and we've done a pretty good job of that, so if the game is to reject leases, we've already worked our way out of a lot of them," King said.

One of the downsides of Chapter 11 for a post-bankruptcy company is that banks are less willing to lend money and on less-favorable terms.

"And I don't know if that's something you want to be dealing with three, four years down the line when the core business itself could be looking healthy," King said.

http://cnniw.yellowbrix.com/pages/cnniw/Story.nsp?story_id=14749298&ID=cnniw&scategory=Business+and+Finance%3ABankruptcy



-- Carl Jenkins (Somewherepress@aol.com), October 14, 2000


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