A $15 million piece Loews Cineplex's bank debt traded in the mid-70s early last week. Traders agreed that the company's announcement that it would be closing more than 100 of its locations shouldn't affect levels. "It's no surprise. Everyone realized the theater industry had reached over capacity," a market watcher said. One dealer alluded to a bank meeting held last Tuesday afternoon, but didn't elaborate on the nature of it. The company has issued statements saying that a Chapter 11 bankruptcy filing is a possible outcome. Calls to the New York City-based company were not returned by press time.
Dealers also agreed that Loews' announcement was hardly an indication of further troubles in the already beleaguered theater industry. Some said that consolidating is the best option for improving state of saturation. "All the theater companies are closing shops [because there are] too many costs involved," a dealer observed. Another trader said films themselves can revive the industry. "It's also just a matter of better movies coming out," said a dealer. Two weeks ago, a $30 million piece of Regal Cinemas bank traded at 71, as dealers spoke optimistically about investor Philip Anschutz's purchase of a significant portion of the bank debt.
Loews has a $1 billion revolver which breaks down into two tranches. BT Alex Brown, Credit Suisse First Boston, Bank of America and Bank of New York are the mandated arrangers, according to Capital DATA Loanware. Spokesmen at all banks either declined to comment or did not return calls by press time. The five-year facility is priced at LIBOR plus 15Ž 8%.