Lehman Brothers will launch today a $370 million exit financing for Regal Cinemas, after winning the financing deal through a competitive bid. Lehman was not part of the pre-petition lending group, said a banker. J.P. Morgan, Bank of Nova Scotia and Bank of America led this group, he added, though he was unaware whether these banks specifically bid for the exit financing business. Credit Suisse First Boston has already signed onto the deal, he noted.
The $370 million deal breaks down into a $100 million five-year revolver and a $270 million six-year term loan "B" priced at LIBOR plus 3 1/4% and LIBOR plus 4% respectively. There is 1/2% available on the unused. The deal is expected to fly as Regal has extremely low leverage, with senior secured debt less than 25% of the structure. Senior secured leverage is 1.25 times and total debt to EBIDTA is 2.6 times. A strong pipeline of films assists the very conservative capital structure over 2002 and 2003 while the company has renegotiated or terminated leases on underperforming theatres. "There has been a cleansing of the portfolios," said the banker. The bank group received 100% with accrued interest on the old loans and the problems that forced Regal into Chapter 11 have been addressed, he said. Amy Miles, e.v.p., and cfo of Regal did not return calls.