New Line in Germany

Minimajor moves distrib'n from Kinowelt to WB

BERLIN — New Line Cinema is poised to switch the German distribution of its movies from Kinowelt to Warner Bros. in 2002.

The company has been exploring alternative distribution options in Germany for several months, and has settled on a deal with its own parent company, Warner. A Warner rep confirmed the pact is in the final stages of negotiation. The first film to be released in Germany by Warner is likely to be “Rush Hour 2.”

News comes as Kinowelt plunges deeper into financial crisis.

In a clear signal of its cash crunch, Kinowelt has warned staff this month’s paychecks will arrive late, sources told Daily Variety.

Shares in the company, which has an output deal with New Line through the end of this year, fell to a new low Wednesday, with rumors circulating Germany’s Neuer Markt stock exchange that the company is on the verge of bankruptcy.

Local reports suggest Kinowelt is struggling to close a crucial $55 million loan. The banks are believed to be reluctant to add to Kinowelt’s $280 million debt until the company fulfills its promise to find a new strategic partner. Hypovereinsbank told Daily Variety Wednesday it was seeking to work out a solution with Kinowelt.

A Kinowelt rep said it is still in negotiations with the BHF bank.

Kinowelt is due to pay New Line a $9 million installment next week as part of its output deal for the year, sources said. The relationship was supposed to go through 2003, but now will end in December after the release of the first “Lord of the Rings” film.

Kinowelt also is due to pay Warner $25 million in September, as the latest installment of its $300 million deal for German TV rights to a package of Warner movies.

The beleaguered company has said it wants to find a new equity partner. Talks with Canada’s Alliance Atlantis to buy into the company did not come to fruition, according to sources.

Kinowelt said Wednesday it will announce its restructuring plans at the end of this week, when it unveils its second-quarter figures. The company has already delayed the publication of those figures.

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