Independent auditors are expressing serious concerns about the financial future of Silver Cinemas Intl., a Dallas-based exhib that also controls the Landmark Theatre arthouse chain.
In an annual filing with the SEC on Friday, the Addison, Texas-based exhib said auditors Deloitte & Touche have raised “substantial doubt” about Silver’s prospects for survival in the increasingly grim exhib biz.
The auditors’ report cites that the company has recorded steep operating losses since its inception in 1996 and has a working capital deficiency.
For the year ended Dec. 31, Silver Cinemas posted an operating loss of $13.6 million compared with an operating loss of about $9.1 million for 1998.
Over the past few weeks, as 1999 financial results have been announced, the news has been ominous for most exhibs. United Artists Theater Co. last week announced a last-ditch recapitalization plan and top circuit Regal Cinemas Inc. revealed it is carrying $1.7 billion in long-term debt.
Deloitte & Touche said Silver Cinemas expects to continue to incur net losses and isn’t in compliance with certain requirements of its $50 million secured credit facility with Farallon Capital Management.
Silver also said it doesn’t intend to make a key interest payment that was due Saturday, though the SEC filing noted that the company has a 30-day grace period.
Execs said they will use that period to explore a range of alternatives to recapitalize or restructure the company.
Silver operates 105 locations and 518 screens.