Onex, a Toronto-based private-equity firm, teamed up with Oaktree Capital Management to purchase Loews Cineplex Entertainment by swapping bank and bond debt for 100% of equity. The acquisition coincides with Loews' emergence from bankruptcy with Deutsche Bank, the pre-petition lead lender now providing a C$140 million exit facility. "Before Loews filed for bankruptcy last year, Onex got involved by taking a strong position in the distressed bank debt while Oaktree had a position in the bonds and bank debt," explained Tim Duncanson, Onex principal.
Onex now has a 60% ownership interest in the company after investing approximately C$320 million in the theatre exhibition-company, Duncanson added, while Oaktree has the remaining interest. Oaktree controlled 60% of the subordinated notes when Chapter 11 was called. Loews filed for bankruptcy in February last year with over-capacity in the industry forcing almost all the main players into Chapter 11. The bank debt was trading in the 70s immediately prior to bankruptcy (LMW, 02/04/01). However, Duncanson declined to comment at what price Onex bought into the bank debt.
Over the last 13 months Loews has closed 100 theatres totaling 700 screens and renegotiated lease terms on an additional 350 screens. The timing of the emergence from bankruptcy has been dictated by the courts and obtaining the requisite financing, Duncanson commented. Onex is taking a long-term view and intends to hold on to its ownership in Onex, he added. Onex does not typically invest in distressed companies, Duncanson said, declining to be drawn on whether the private equity firm would continue to take an active interest in the distressed market.