Denver entrepreneur Phil Anschutz to take over Regal Cinemas Inc.
Atlanta Business Chronicle
Denver entrepreneur Phil Anschutz plans to take control of Knoxville, Tenn.-based Regal Cinemas Inc., which will file for bankruptcy and will seek creditor approval for a plan that would restructure its $2 billion in debt and commence a voluntary bankruptcy filing.
The chain announced today it will voluntarily file Chapter 11 bankruptcy in the next month or so to repay creditors and shift ownership to Anschutz. Its reorganization, which has already been largely orchestrated, is expected to take only a month or two.
The Chapter 11 bankruptcy plan includes general unsecured creditors with cash payments of up to $75 million. The company plans to maintain business operations throughout the bankruptcy process and intends to complete its reorganization within 60 to 90 days of its bankruptcy filing.
According to reports, the plan would allow the bulk of Regal's estimated $2 billion in debt to be paid off, including unsecured trade creditors who are often low in the pecking order in a bankruptcy filing.
Regal, which has been owned by leveraged buyout specialists Kohlberg Kravis Roberts & Co. of New York and Dallas-based Hicks, Muse, Tate & Furst Inc. since 1998, has been on the brink of bankruptcy since it defaulted on some bonds last December. Since then, Anschutz and his partner in the movie theater business, investment fund Oaktree Capital Management LLC of Los Angeles, have been buying Regal's bank loans. They now hold about $1.2 billion of the chain's roughly $2 billion in debt, making them the chain's biggest creditors.
With the deal, Anschutz and Oaktree will basically trade their Regal debt for equity.
Earlier this year, the partners also took control of Edwards Theatres Circuit Inc. of Newport Beach, Calif., via bankruptcy. The partners bought 51 percent of the family-owned company.
Anschutz took a majority stake in Denver-based United Artists Theatre Group of Englewood last year after it filed for bankruptcy. UA asked Anschutz to be its white knight, and to help it pay off more than $450 million in debt.
Regal is the twelfth movie theater owner to file bankruptcy in the past year. Many major chains got in trouble in the late 1990s when they built lots of new, state-of-the-art theaters and ended up with too many -- and more debt than they could handle.
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