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Loews warns Street it expects to default

2nd-qtr. revenue, cash flow lower, net losses higher, exhib says

NEW YORK — As the tale of exhib woes continues, theater chain Loews Cineplex Entertainment warned Wall Street on Friday that it expects to default on its senior credit facility at the end of the month.

Revenue and cash flow for the second quarter ending in August will be considerably lower and the net losses higher than in the year-earlier period, Loews said. That means the company won’t be able to comply with certain covenants of its bank credit facility and will need to renegotiate new terms or obtain a waiver.

CEO Lawrence Ruisi cited the “disappointing” performance of summertime product, unfavorable product allocation at Loews’ Canadian locations and continued decay at its older theaters — the result of heightened competition from newer megaplexes.

The New York-based chain, he said, is in discussions with its banking group regarding modifications to certain covenants and also pursuing alternatives like sale/leaseback transactions and equity infusions that will help it meet its covenants in going forward.

Loews Cineplex has 2,967 screens in 385 locations primarily in the U.S., Canada and Europe.

Wall Streeters said that Loews still has more cash on hand than some of its competitors but noted that the company was a bit behind the curve in its megaplex building, so fewer of its theaters have stadium seating and other amenities offered by its competitors.

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