NEW YORK — Carmike Cinemas Inc. signed a $75 million leasing deal with Helmstar Group Inc. to finance the construction of about a dozen new multiplex theaters over the next two years, Carmike said Tuesday.
The deal is just the latest sign of how plentiful capital has become for movie exhibitors building new theaters. Earlier this month AMC Entertainment raised $276 million in a public offering of a real estate trust that will buy 12 theaters from AMC, enabling the exhib to reduce its debt and spend more money building new theaters.
Eye to economy
Carmike looked at doing a similar deal but in the end decided it would be cheaper to raise money in the leasing deal with Helmstar, whose subsidiary Movieplex Realty Leasing LLC will sell bonds to investors to raise the cash.
“This is a different way of coming up with some of that kind of capital,” Carmike CFO John Barwick said. Carmike stock fell 12¢ Tuesday to close at $30.31.
Carmike, the No. 1 exhib in the country, will use the money to finance the construction of about one quarter of the theaters it plans to build in the next couple of years. Barwick said 10 to 12 theaters averaging 14 to 16 screens each would be built over the next two years from the funds raised.
The exhib, which focuses on rural markets, is in the middle of ramping up its building plans and will open 350 screens next year and about as many in 1999. This year it will open about 185 screens, Barwick said. Carmike now operates 2,694 screens.