Lehman Brothers executed a reverse flex on the $270 million term loan "B" for Regal Cinemas after more than 60 accounts committed over $1 billion to the deal. A banker said, after overwhelming investor response the spread on the "B" was cut 1/2% from LIBOR plus 4% to LIBOR plus 31/ 2%. The $100 million revolver is still being syndicated, he added, and is still priced at LIBOR plus 31/ 4%. The financing backs Regal's exit from bankruptcy, and a potential revival for a once shunned and troubled sector (LMW, 1/14).
Debt-financed over expansion caused the cinema chains to cannibalize on each other, said one banker. But bankruptcy has allowed the companies to reject previously non-cancelable leases and construction commitments, and close obsolete theatres. Regal's previous bank group received 100% with accrued interest and Regal now has extremely low leverage, explained the banker.