Regal funds treat for shareholders

Co. handing out $5.05 cash for each share

Looking to play Santa Claus in July, Philip Anschutz’s Regal Entertainment Group is mounting the interesting ploy of piling on a bit of debt to fund a hefty shareholder dividend.

The nation’s No. 1 exhib said Wednesday it would pay on July 1 a cash dividend of $5.05 for each share held on June 20.

Chief among those benefiting from the huge dividend will be Anschutz and L.A. buyout firm Oaktree Capital, which together own 90 million shares, or 65% of the company. The partners acquired three financially distressed circuits to form Regal and then took the company public last year.

So far, no one has suggested the dividends gambit is selfishly motivated, largely because the company has a low debt load and its largesse could attract new interest in the stock. Regal shares, which have risen 4% this year, climbed 40¢ to $22.60 on Wednesday.

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In May, Regal announced plans to sell $200 million in convertible senior notes to finance a one-time dividend of as much as $5.10 a share. As now detailed, the move will cost the Denver-based company about $715 million.

Theoretically, Regal could have tagged proceeds from such a notes sale for the acquisition of more theaters. But at the moment there are no obvious takeover targets or even attractive properties for sale.

Regal has projected a profit of $200 million-$275 million for fiscal 2003. The forecast doesn’t include the impact of the dividends, however.

“Management is particularly proud of the fact that we can provide healthy returns to our stockholders while maintaining a prudent balance sheet,” co-CEO Mike Campbell said in a statement.

Regal operates 6,159 screens at 567 theaters in 39 states.