Regal Cinemas vows to return stronger after filing for protection

Associated Press

KNOXVILLE, Tenn. — Regal Cinemas Inc., the nation’s largest movie theater chain, will emerge from bankruptcy reorganization a "much stronger" company, Regal chairman and founder Mike Campbell said Friday.

The Knoxville-based chain, taking a route similar to several of its competitors, filed a petition for Chapter 11 reorganization late Thursday in U.S. Bankruptcy Court in Nashville.

Regal owns four Snohomish County theaters: the Everett 9 Cinemas at 830 SE Everett Mall Way; the Marysville Cinema 14 at 9811 State Ave.; the Alderwood 7 Theaters at 3501 184th St. SW in Lynnwood; and the Mountlake 9 Theater at 6009 SW 244th St. in Mountlake Terrace.

Regal said last month the company planned to make such a filing and said Friday its reorganization plan had the support of a majority of creditors.

If accepted by the court, the move will effectively transfer ownership of Regal from Kohlberg Kravis Roberts &Co. of New York and Hicks, Muse, Tate &Furst Inc. of Dallas to a consortium led by Denver billionaire Philip Anschutz.

Anschutz already owns the United Artists and Edwards theater chains.

The reorganization is expected to take 60 to 90 days, during which Regal expects to close an additional 20 to 25 older theaters, most in cities where it already has a presence. The company already has closed about 100 theaters in the past year.

Layoffs, however, should be minimal and Regal expects to emerge from bankruptcy as the largest movie exhibitor in the country with some 3,700 screens and more than 300 locations.

The bankruptcy filing comes with the approval of 95 percent of Regal’s creditors, all of whom are expected to be repaid.

"When you are going to get 100 cents on the dollar, you really don’t get much better than that," Campbell said.

The exception is KKR and Hicks, Muse, which paid $1 billion for Regal in a leveraged buyout in 1998. Under the reorganization, they will get nothing.

For Campbell, a former grocer who built one theater chain, sold it and then formed Regal in 1989, the bankruptcy filing comes with mixed emotions.

"Well, it is a company that I started 11 years ago, and it has been to the top of the mountaintop and down in the valley," he said. "But it is still a healthy company."

The last couple of years "have proven that certainly our company is not immune from the overall issues that haunted the industry as a whole. And that is related to two things — the balance sheet and real estate issues," he said.

The industry suffered from an overcapacity of multiplexes, fueled by a debt-driven building boom.

Regal’s debt rose to nearly $2 billion as its screen count neared 4,500. Campbell said debt should be down to about $500 million after reorganization.