Thursday September 14, 7:07 pm Eastern Time
GC Cos may seek bankruptcy protection--Harcourt
By Tim McLaughlin
BOSTON, Sept 14 (Reuters) - Giant textbook publisher Harcourt General Inc (NYSE:H - news) said in a U.S. regulatory filing on Thursday that GC Companies Inc GCX.N, the operator of General Cinema Theatres, may have to seek bankruptcy protection unless it wins concessions from creditors.
Chestnut Hill, Mass.-based Harcourt said it carries a secondary liability on GC Companies' estimated $355 million in future rental payments due under theatre leases. GC Companies, also based in Chestnut Hill, Mass., operates more than 1,000 U.S. movie screens.
A GC Companies official did not return a call seeking comment. The company last made an announcement on Aug. 21, when the company reported a $10.1 million loss for the third quarter, ended July 31, on revenue of $108.6 million.
Unless GC Companies is able to reach a deal with creditors it may need to explore several alternatives, including selling assets or filing for bankruptcy protection, according to Harcourt's most recent filing with the U.S. Securities and Exchange Commission.
The warning comes as cinema operators throughout the United States have been rocked with loan defaults and bankruptcy filings, as the cost of building stadium-style megaplexes spirals out of control. Last month,for example, Loews Cineplex Entertainment Corp, (NYSE:LCP - news) the No. 2 movie theatre operator, said it expects to default on a bank loan.
Harcourt spun off its theatre operations to GC Companies in 1993. If GC Companies is unable to reach deals with its creditors, it will not be in compliance on Oct 31 with certain financial covenants contained in creditor agreements, according the SEC filing.
Harcourt said GC Companies' other creditors already have waived some of their financial covenants with the company.
``In light of the foregoing, (Harcourt) anticipates that (GC Companies) may need to actively consider strategic alternatives, including a potential restructuring, recapitalization, bankruptcy organisation or the sale of certain assets,'' Harcourt said in the filing.
The publisher said it cannot currently estimate its exposure under the theatre leases.
``However, based on a number of factors, the company believes that its ultimate liability will be significantly less than the aggregate future rental payments'' of $355 million, the company said.
Shares of GC Companies have plunged nearly 80 percent in recent months, from more than $35 to a Thursday close of $8-3/4 on the New York Stock Exchange. Harcourt closed at $60-15/16 down 12/16 also on the New York Stock Exchange.
Marc Jones
The headline says they're "weighing" Chap. 11.. ------------------
Better Projection Pays!
Anyone hear if they are closing Premium screens anywhere else?
It's a pity, the Lincoln Plaza was a nice theater with a THX house. The theater was only 6 years old.
I think that they closed it a week later because they only have so many people to close these theatres at one time. If there are any more questionable theatres up there, expect them to close soon as well.