Edwards Theater Circuit has struck a definitive agreement with entertainment entrepreneur Philip Anschutz and vulture fund Oaktree Capital for their so-called “recapitalization” of the family-run circuit.
It’s believed that means the Anschutz-Oaktree group will acquire a roughly 51% stake in the Newport Beach-based movie chain, with the Edwards family retaining 49% and chairman Jim Edwards getting some sort of lesser corporate office.
Details won’t be released until related documents are filed in U.S. Bankruptcy Court in Los Angeles, probably within two weeks. But a press release is expected soon announcing that a definitive pact has been reached.
The agreement has been expected ever since the parties revealed Feb. 15 that Anschutz and Oaktree would make “a significant investment in the recapitalization of the Edwards chain.”
No dollar amount has been revealed so far. But, if structured like some other recent exhib reorgs, the plan could see the new ownership group gain control of Edwards for less than $100 million, plus debt assumption.
Anschutz already has accomplished the takeover of the large United Artists Theatres chain and is angling — with Oaktree — to make a move on Regal by snapping up most of that circuit’s distressed debt. Oaktree recently won a bankruptcy court battle for arthouse and discount theater operator Silver Cinemas.
The moves, and similar ones involving new ownership at chains including mega-circuit Loews Cineplex, come amid an industrywide financial crisis in exhibition following a recent building binge. Anschutz, who also has entertainment holdings in moviemaking, sports and concert operations, seems to be pursuing a consolidation strategy in exhibition, analysts suggested.
“This appears to be the next step in the creation of what could be the largest theater chain in history,” said David Davis, senior veep and analyst at Los Angeles investment firm Houlihan, Lokey, Howard & Zukin.
Indeed, the UA, Edwards and Regal chains together have well over 5,000 U.S. screens. Because Anschutz also controls fiber-optics networker Qwest Communications, some observers believe he eventually may convert a number of theaters to digital projection.
Edwards, which has been wholly owned by the Edwards family for 71 years, filed for Chapter 11 bankruptcy reorganization in August — one of at least 10 circuits to do so in the past year. Its reorg plan would have to be approved by the bankruptcy court, but execs are confident approval can be won some time this summer.
Edwards operates 687 screens in Southern California, Idaho and Texas.