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TOPIC: Carmike folds

Carmike folds 08 Aug 2000 23:32 #601

  • Ken Layton
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Just heard today that Carmike Cinemas has filed Chapter 11 protection. Also, Regal Cinemas may be defaulting in September.



[This message has been edited by Ken Layton (edited August 09, 2000).]
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Re: Carmike folds 09 Aug 2000 12:33 #602

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Daily Variety is now reporting this at www.variety.com
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Re: Carmike folds 09 Aug 2000 16:22 #603

  • Mike
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On our home page "poll" I was going to ask which of the GIANTS OF EXHIBITION would fall first. The over building go-go has come home to roost and The Perfect Storm was not enough to bail out. There was no grand summer for the cash hungry theatres. I don't take any pleasure in this but as these giants built their empures you can only wonder how many theatres they crushed.

Mike Hurley
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Re: Carmike folds 09 Aug 2000 16:29 #604

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EXHIBITOR CARMIKE TURNS PAGE TO
CHAPTER 11

State of the industry caused financial woes, others may
follow

By JILL GOLDSMITH

NEW YORK -- Things took a nasty turn in the beleaguered movie theater
biz Tuesday as Carmike Cinemas, the nation's fourth-largest exhibitor, filed
for Chapter 11 and the biggest chain in the country, Regal Cinemas, hinted
that it might not be far behind.

"Things are bad in the sector, but they're about to get worse," said analyst
Daniel O'Neill of Credit Suisse First Boston. "You can't keep pouring cap-ex
into a no-growth business." He means the capital expenditure on new
theaters that has lifted the nation's screen count to untenable levels.

Atlanta-based Carmike still has some cash on hand but said senior lenders
blocked it from making an interest payment since it violated loan covenants
that require it to maintain certain financial ratios. That generally refers to a
debt-to-equity ratio, which has been leaning heavily toward the debt side at
Carmike and most of its competitors for the past several years.

Distrib execs fully expect Carmike's existing cash and resources to allow the
circuit to soldier on without being acquired, as have other wounded circuits.

Carmike opted for Chapter 11 after careful consideration "of our current
circumstances and the state of our industry," company chairman Michael
Patrick said. "Our focus is on preserving our assets and improving our
operational strength during this difficult period."

Making arrangements

United Artists, generally considered to be in the worst shape of the bunch, is
hashing out arrangements with its senior lenders. And Regal said it hopes to
do the same by the end of the third quarter. AMC Entertainment is hurting
as well, as is Cinemark and, to a lesser extent, Loews Cineplex.

The group is staggering under an enormous debt load from building
expensive multiplexes across the country, even as attendance in the theaters
is flat, and in some cases, down. June was dismal, and competition from the
Olympics in September will kill fourth-quarter comparisons as well.

And the new locations are cannibalizing the old ones, which are being closed
down much too slowly.

There are about 37,000 screens in the U.S., and most, including the
exhibitors themselves, agree that the number needs to fall to 25,000 for the
industry to breathe easy again. Exhibs have slowed down their building, but
have not stopped it. The screen count was up 9% last year and will be up an
estimated 4%-6% this year, as exhibs apparently keep spotting markets that
are screaming for a new multiplex.

It's an example of how "individually rational decisions led to collectively
irrational behavior," O'Neill said.

Worse is good

Wall Street is looking for more cases of Chapter 11. And, paradoxically, the
worse things get, the faster they may improve, as financial ills force
consolidation and push exhibs to shutter underperforming theaters faster.
Mergers in the industry are still a possibility, except none of the players has
spare cash for deals, and their stocks and bonds are all way down.

Carmike shares closed at $1.94 Tuesday. They were trading at close to $15
a year ago.

The circuit owes significant amounts to several of the studios that supply it
with product. But Carmike's chief creditors are Bank of New York, trustee
for holders of $209.3 million in bonds. Atlanta-based Wachovia Bank is
owed $263 million in loans, according to court filings.

(Carl DiOrio, Dade Hayes in Hollywood and Bloomberg News
contributed to this report.)
Michael Hurley
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Re: Carmike folds 09 Aug 2000 20:02 #605

  • RICK
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WHILE I HATE TO SEE ANY MOVIE THEATER IN TROUBLE IT APPEARS TO ME THAT THEY HAVE BROUGHT ON ALOT OF IT THEM SELVES.
IS THERE ANY WAY US SMALL GUYS CAN CAPITALIZE ON THEIR PROBLEMS? LIKE MAYBE THOSE THEATERS THAT HAVE BEEN THINKING ABOUT RAISING ADMISSION MAYBE THIS WOULD BE THE TIME TO DO IT OR MAYBE TO ADVERTISE THAT THEY HAVE THE SAME OLD PRICES. BLOW UP THE FACT THAT WE ARE THE OLD RELIABLE GUYS? WHAT DO YOU THINK?
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Re: Carmike folds 10 Aug 2000 16:36 #606

  • GREGBORR
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Should provide good opportunities for those independents wishing to expand to purchase theatres from the larger chains, The big boys are certainly looking for a short term infusion of capital.

Greg Borr
Ready Theatre Systems
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Re: Carmike folds 10 Aug 2000 22:39 #607

  • Mike
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Absolutely on the opportunities in so many ways. But the real lesson is this. I was tempted, I'm always tempted to build more, add screens, build ahead of competion but when I do the numbers I can't justify it. The best lesson is trust the numbers and don't get caught playing speculation musical chairs. What was that sound? The music stopping. I'm hearing Regal and UA are right behind them.

The paranoids have opined that the weak summer slate was a way to thin out the herd :done by the distribs but if so then they're left holding the bag on unpaid film rentals that the cash starved hoarded.

The bad years of the indies getting killed off left a hardy, innovative bunch of entrepeneurs who are resourceful, smart, hard working, and talented entertainers and promoters, and they know how to run with the big dogs. My hats off to you guys!

Mike Hurley
www.bigscreenbiz.com
Michael Hurley
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