Exhib GCC weighs Chap. 11; shares plummet
Shares in General Cinemas parent GC Cos. sank 37% Monday after the company acknowledged it’s considering filing for Chapter 11 bankruptcy reorganization.
GC said in a filing with the Securities and Exchange Commission that it’s seeking concessions from creditors and may close some unspecified operations and sell certain assets. But the Chestnut Hill, Mass.-based company, which had 1,000 screens at 130 U.S. sites as of July 31, also said it may pursue bankruptcy reorganization.
In its SEC filing, GC blamed its plight on “a decline in patronage and profitability, primarily due to the buildup of megaplex theaters over the last several years and its inability to terminate leases.”
The situation coincides with an industrywide plight among exhibitors at present. A modest downturn in box-office receipts is adding to pressures from high debt loads left from a recent megaplex building binge by many companies.
But analysts say GC has done relatively little megaplex development. Its problems are tied more to competitive pressures from other circuits’ megaplexes, they say.
Older theaters in play
Several exhibs, including some of the biggest circuits such as Carmike Cinemas and United Artists Theaters, have recently filed for Chapter 11 bankruptcy reorganization as a means of breaking leases on older properties. GC also has had trouble closing older properties as aggressively as it would like to.
Analyst Arthur Rockwell of Rockwell Capital Management in Los Angeles said General Cinema’s exhibition woes have been exacerbated by losses from a portfolio of other investments held by the parent company.
GC’s largest shareholder is money manager Mario Gabelli. Affiliates of Gabelli Asset Management hold about 33% of GC’s common stock.
GC shares closed down $2.83 at $4.94 on Monday.
(Bloomberg News contributed to this report.)