Mitey bites on Imax debt

Strategy includes cutting costs, capitalizing on '02 film slate

TORONTO — Mitey Cinemas, a subsidiary of embattled large-screen film company Imax, has bought $48 million in deeply discounted Imax debt, which Imax says it plans to retire.

“This is a significant first step in Imax’s goal to deleverage the company and begins the process of reducing our debt,” Imax co-CEOs Rich Gelfond and Brad Wechsler said in a statement.

Because of market uncertainties in the wake of the Sept. 11 terrorist attacks on the U.S. and the fact that the exhibition biz is suffering these days, Mitey picked up the $48 million in notes for just $7.5 million, “a substantial discount, which we believe will improve the outlook for Imax’s business,” Gelfond and Wechsler said.

“We’ve been working over the past year to reduce our cost structure,” Gelfond told Daily Variety. “We’ve cut our overhead by 20%-25%, and buying in these bonds reduces our interest payments by almost $3 million a year.”

Gelfond pointed out that Imax’s strategy is to “skinny down a bit,” cut costs and capitalize on its film slate for 2002, which looks likely to be a particularly strong one. Scheduled releases include the bigscreen release of Disney’s “Beauty and the Beast,” the prequel to “Black Stallion,” the 3-D space station film, James Cameron’s 3-D underwater pic and Steve Oedekerk’s “Santa and the Snowman,”. “Going in, we really want to have the financial strength to capitalize on that,” he said.

The purchase cuts Toronto-based Imax’s debt from $300 million to $252 million, which includes the remaining $52 million in convertible subordinated notes, due April 1, 2003.

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