HOLLYWOOD — The stock market’s recent cratering and general gloom on Wall Street has prompted No. 3 U.S. exhib Cinemark to postpone its planned initial public offering.
Dallas-based circuit’s action came one day after shares in rival AMC Entertainment were pummeled amid investors’ ire over an exec-loan disclosure (Daily Variety, July 23). And it coincided with shares in Regal Entertainment dropping below that stock’s May launch price for the first time.
Together, the developments mark a dramatic halt to exhibition’s recent rise in the public markets.
Seeking to strike while the exhibition iron was hot, Cinemark had skedded a July IPO with a target pricing range of $17-$19. With box office going great guns this year and Regal showing the way, closely held Cinemark saw a ripe opportunity to tap the public monies to fund future acquisitions.
But all that’s off for the time being, and execs declined to say when Cinemark’s IPO might be resurrected.
“We are postponing due to the market conditions, which are not optimum,” marketing veep Terrell Faulk said. “We are regrouping, and as the market improves we hope to come back in at a later date.”
Cinemark, founded by chairman-CEO Lee Roy Mitchell in 1987, had hoped to raise at least $242.5 million in its IPO.
The exhibition industry is undergoing dramatic consolidation among top theater chains, and Cinemark, which made a play for General Cinema before Regal won that auction, is believed to remain interested in growth through acquisition. Entertainment entrepreneur Philip Anschutz constructed Regal — the nation’s biggest movie chain — through successive acquisitions of United Artists Theaters, Regal Cinemas and Edwards Theater Circuit.
Elsewhere, No. 2 U.S. exhib AMC Entertainment has also been acquisitive of late, grabbing General Cinemas and Gulf States Theaters. And the fourth-biggest circuit, Loews Cineplex, recently absorbed Cinemex into its fold after Canadian parent Onex acquired the Mexico City-based circuit.
Cinemark has more than 3,014 screens in 278 theaters in 33 U.S. states, with international operations largely concentrated in Latin America.
The dramatic industry consolidation follows a two-year period marked by a dozen major exhib bankruptcies. Anschutz snapped up his 5,900-screen holdings in bankruptcy reorgs, and AMC got General Cinemas via a court-supervised proceeding.
Cinemark got through the difficult period relatively unscathed but thus far hasn’t made any major acquisition moves.
Regal shares closed down 15¢, or 1%, to $19.20 after earlier trading below $19, its IPO launch price. AMC dropped $1, or 11%, to $7.80 on Tuesday after shedding 21% Monday.