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Exhib sees stox slip

Shares in General Cinemas parent co. drop 21%

HOLLYWOOD — Shares in General Cinemas parent GC Cos. sank 21% even as some recently battered exhibition stocks posted modest gains.

Shares in the Chestnut Hill, Mass.-based company dropped $1.75 to close at $8.25 on Friday in trading almost four times the normal volume. GC, which operates 1,195 screens at 147 sites in the U.S. and South America, declined comment, as requested by the New York Stock Exchange, on its recent trading activity.

Analyst Daniel O’Neill of Credit Suisse First Boston said the stock, which entered the weekend at a 52-week low, may be suffering under debt concerns similar to those affecting other exhibitors.

He also noted that the company maintains a nonexhibition investment portfolio that hurt earnings in GC’s most recent quarter. One stock in which the company is substantially invested, European broadband-access provider Global Telesystems, has been a recent underperformer, the analyst noted.

“GC doesn’t have a lot of debt, but they were in violation of some of their loan covenants in April,” O’Neill said. “I would guess the stock-price decline reflects both the stocks in its portfolio and the expectation that they could have further covenant problems like other exhibitors have had.”

Industry ailing

Debt woes at circuits including Carmike Cinemas and Edwards Theaters have prompted recent bankruptcy reorganization filings, but GC’s smaller debt load makes it unlikely that the company will follow suit, O’Neill said.

The analyst suggested that GC’s most recent stock drop was likely triggered by the sale of a block of shares by an institutional investor. Funds controlled by money manager Mario Gabelli have holdings amounting to a 29% stake in GC, he noted, and GC chairman Richard Smith, president Robert Smith and other Smith family members together control another 30%.

In other sector activity Friday, shares in Carmike climbed 25¢, or 17%, to $1.44, and Loews Cineplex rose 6¢, or 3.5%, to $1.69. AMC Entertainment was off 13¢, or 6.6%, at $1.75.

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