LAS VEGAS — Edwards Theatres topper Jim Edwards and his family are expected to sign off by month’s end on a plan under which they would retain a 49% stake in the ailing circuit, with a group led by entertainment entrepreneur Philip Anschutz getting the balance.
The Edwards family, which has wholly owned the Southern California circuit for 71 years, has already blessed the plan, according to a key insider. Oaktree Capital, a Los Angeles-based vulture fund, would partner with Anschutz in the takeover.
Edwards Theatres formally has confirmed only a preliminary “recapitalization agreement” with the Anschutz-led group and has declined to discuss details. At the time that pact was announced, a source close to the proposal said it actually involved an Anschutz plan to take control of the circuit (Daily Variety, 2/16).
But it’s been uncertain until now how substantial the Edwards family’s holdings in the Newport Beach-based circuit might remain after any restructuring.
Edwards filed for Chapter 11 bankruptcy reorg in August, one of 10 theater chains to do so to date. Exhibs have been suffering under heavy debt pressures left over from a recent megaplex-building binge.
Court sign-off needed
Any definitive agreement between the Anschutz group and the Edwards family would have to be approved by U.S. Bankruptcy Court. But sources suggest that approval is expected to follow in the next couple of months, and Edwards could emerge from its reorg as soon as June.
Financial terms of the Anschutz-led proposal remain unclear, but if structured like some similar past exhib reorgs the plan could see the group gain control of Edwards for under $100 million plus debt assumption.
Exhibs have been huddled here since Monday for the annual ShoWest trade show. Much of the talk at sessions and receptions has been of looming ownership changes at various big circuits.
Anschutz previously took control of United Artists Theatres by buying up distressed debt and converting it to equity in a Chapter 11 reorg. He’s also known to be angling for the takeover of No. 1 U.S. exhib Regal Cinemas.
A Regal takeover, combined with UA and perhaps Edwards, would give Anschutz almost unprecedented clout in U.S. exhibition. Some say that could translate into a unique bargaining position, and could provide the publicity-shy financier better terms in film licensing pacts.
The Edwards chain operates 687 screens in Southern California, Idaho and Houston.
Anschutz, in addition to exhibition, film production and sports-arena operations, holds a controlling stake in fiber-optics networkers Qwest Communications. That’s led some observers to suggest his exhib moves may lead to a quicker conversion of Anschutz theater properties to digital projection than might be true otherwise, though nothing on that front is expected in the near term.