| Philip Anschutz |
Syndication is said to be going well for The Anschutz Co.'s and Oaktree Capital Management's $1.75 billion recapitalization of Regal Cinemas Corp., despite some concerns over the massive size of the dividend. Proceeds from the Credit Suisse First Boston deal are being used to refinance the company's existing credit facility, redeem two issues of senior subordinated notes and pay a $710 million dividend to shareholders. "A lot of people think the theater sector is pretty cleaned up right now. These guys have some pretty decent numbers. It's going to go well," one loan investor noted. But not everyone is thrilled. "The downside is it's a big dividend and a big payday to the equity investors a year-and-a-half coming out of bankruptcy. But that's what our market is doing these days--dividends are being paid," the loan investor said. "The equity holders here have made a home run--a grand slam," another buysider commented. "I don't like how they restructured it to make it all senior," a third buysider said. Leverage will increase from 3.8 times to 5.1 times. Moody's Investors Service has weighed in by noting that the company continues to pay out more in dividends than it generates in cash.
Regal's "B" loan was increased by $400 million to $1.65 billion during syndication. The deal also includes a $100 million revolver. Both tranches are priced at LIBOR plus 2 3/4%. Anschutz officials referred calls to Regal officials. Don DeLaria, Regal's v.p. of investor relations, and Oaktree officials did not return calls.