You will be redirected back to your article in seconds

S&P hits Regal debt rating, watches Loews

Underperforming pics not cause of woes, analyst sez

Bad news on debt ratings has rained on a pair of movie circuits following an earlier downpour on Carmike Cinemas.

On Friday, Regal Cinemas, a privately held Knoxville, Tenn.-based chain of 2,342 U.S. screens, was hit with a Standard & Poor’s ratings downgrade on its junk bonds to CCC+ from B- for subordinated debt and to B from B+ on corporate debt.

The same day, New York-based Loews Cineplex Entertainment, which operates 2,926 screens worldwide, got word S&P had placed its debt ratings under review with “negative implications.” Regal also had other unspecified ratings put on credit watch.

Bleak days

Those developments followed Wednesday’s move by Carmike creditors to block interest payments on its debt because of violations of loan covenants. That step was followed by an S&P downgrade of ratings on Carmike debt to a default grade of “D.” Earlier, Moody’s Investors Service had lowered debt ratings for Carmike, Loews Cineplex and AMC Entertainment.

Most major exhibition companies are suffering under high debt loads after a period of broad expansion in the industry, and many circuits have experienced liquidity pressures as revenue has failed to comfortably outpace debt-service needs. Analysts say there’s little hope for a turnaround barring major consolidation or more widespread closing of money-losing properties.

Ongoing trend

“It’s an ongoing trend,” said analyst Arthur Rockwell of Rockwell Capital Management in Los Angeles. “There’s got to be more restructuring of the industry and probably some debt restructuring.”

Rockwell added that exhibitors can’t complain that underperforming Hollywood movies are behind their woes. “There’s been a fair number of hits out there, so they can’t complain about a lack of product,” he said. “The answer still just comes to this: They’re overbuilt and overleveraged.”

The latest ratings moves came after the close of trading for the weekend.

Loews shares were unchanged Friday at $3.19. Shares in Carmike, which lost more than 50% after its interest payments were halted, closed up 13¢ at $2.

More Biz

  • Davan Maharaj Mel Gibson

    L.A. Times Publisher's Lawyer Was Accused of Extorting Mel Gibson

    The attorney who negotiated a $2.5 million exit package for L.A. Times publisher Davan Maharaj was previously accused of using secret recordings to extort actor Mel Gibson. Surreptitious recordings also figure in the Maharaj case. NPR reported on Wednesday that Maharaj taped Tronc chairman Michael Ferro. According to the report, Ferro was heard on the [...]

  • 'Blurred Lines' Suit Ends With $5

    'Blurred Lines' Suit Ends With $5 Million Judgement Against Robin Thicke, Pharrell Williams

    After five years, the legal battle over the copyright of the Robin Thicke’s 2013 hit “Blurred Lines” has ended, with Marvin Gaye’s family being awarded a final judgment of nearly $5 million against the song’s primary writers, Robin Thicke and Pharrell Williams, according to CNN and other reports. The pair were accused of copyright infringement [...]

  • WME Veteran Ari Greenburg Promoted to

    WME Veteran Ari Greenburg Promoted to President of Talent Agency

    WME veteran Ari Greenburg, one of the original Endeavor staffers who helped build the talent agency that became an industry powerhouse, has been promoted to president. Greenburg will oversee all daily operations across WME and its offices in Beverly Hills, New York, Nashville, London and Sydney. The promotion recognizes the role that Greenburg has played [...]

  • Alison Wenham Steps Down as CEO

    Alison Wenham Steps Down as CEO of WIN

    After 12 years at the helm of the Worldwide Independent Network, a global trade organization for the independent music industry, Alison Wenham is stepping down as Chief Executive, it was announced today. Prior to joining WIN full time in 2016 Alison was CEO of The Association of Independent Music (AIM), which she started in 1999. [...]

  • Leslie Moonves

    Leslie Moonves Quietly Exits AFI and Paley Center Boards

    Leslie Moonves, the ousted CEO of CBS Corp. who has been accused of sexual misconduct by several women, is no longer serving on the boards of trustees of the American Film Institute and the Paley Center for Media. For now, Moonves retains his seat on the board of gaming company ZeniMax Media. The appointments on [...]

  • DOJ Indicts Five in Piracy Ring

    Department of Justice Indicts Five in International Piracy Ring

    Five men were indicted Wednesday on charges that they hacked into the servers of production companies, and stole hundreds of films and TV shows, including “50 Shades of Grey” and “The Walking Dead.” The men are based in four countries — the United Kingdom, the United Arab Emirates, Malaysia, and India. Only one has been [...]

More From Our Brands

Access exclusive content