Hicks, Muse and KKR outmaneuvered, analyst sez

Three separate investment groups are butting heads over Regal Cinemas, the nation’s largest movie theater chain, in a sign the beleaguered biz has hit bottom, with nowhere to go but up.

In the process — and to the amusement of many on Wall Street — Regal co-owners Kohlberg Kravis & Roberts and Hicks, Muse, Tate & Furst have been outflanked but good by Denver billionaire Phillip Anschutz.

The wily entrepreneur has already taken charge of smaller United Artists by buying up the circuit’s debt, which was converted into a controlling equity stake when UA was restructured under Chapter 11.

Meanwhile, he quietly amassed $500 million of Regal’s debt, too, and is poised for a repeat performance.

“The great financiers at Hicks, Muse and KKR have been outmaneuvered. They got caught flat-footed,” chortles one media analyst.

The buyout firms, which acquired Regal in 1998, are offering $1 billion to buy up all of Regal’s debt themselves in order to keep the chain. Now they’ll have to work with, or around, Anschutz — and it will cost them.

“They were sitting on their hands. and Anschutz did an end run around them,” say one Wall Streeter.

Hesitation is understandable. Hicks, Muse and KKR have already lost a pile of money on Regal, whose lending banks blocked interest payments to bondholders in December. That means the chain may have to file for bankruptcy by June.

At last count, the team of Greenwich Street Capital Partners and Putnam Investment Management had also emerged with an enticing $1.1 billion offer.

That’s a lot of suitors for an ailing company in an industry where nearly all of the major players have filed for Chapter 11 over the past year.

Exhibs choked themselves with debt while building costly megaplexes that cannibalized older theaters and created a huge overcapacity of screens. New construction has stopped, and many theaters are being shuttered.

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