Bloomberg News, with files from Reuters
401 words
1 March 2002

Financial Post: News
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NEW YORK - Loews Cineplex Entertainment Corp. won a judge's approval of a Chapter 11 recovery plan that allows the third-largest theater chain to satisfy creditors and come out of bankruptcy under new ownership.

The reorganization plan approved by U.S. Bankruptcy Judge Allan Gropper in Manhattan gives Onex Corp. and Oaktree Capital Management LLC control of Loews Cineplex. Together, they hold about a third of Loews's US$1.5-billion in debt.

Loews's Chapter 11 filing last February followed overbuilding throughout the industry. The New York-based company, which began in 1904 as an Ohio nickelodeon, once operated 2,965 screens at 365 locations. It shuttered more than 100 sites in the past year.

"It's great to see Loews emerge from bankruptcy as a healthy, unleveraged company ready to succeed and grow," said Marc Beilinson, a Los Angeles attorney representing Loews's creditors' committee.

The rescue plan, filed in November, fully pays bank lenders, who are owed more than US$742-million. Unsecured creditors would divide US$45-million in cash from Toronto-based Onex and Los Angeles- based Oaktree. Together, Onex and Oaktree hold about US$300-million in bank loan claims and more than US$177-million, or 56%, of Loews's US$313-million of bond debt.

Unsecured creditors will recover US10 cents to US12 cents on the U.S. dollar. The theatre chain's shareholders get nothing under the plan. Sony Corp. and Vivendi Universal SA held about two-thirds of the shares.

The bankruptcy plan values Loews, with about 2,400 screens at 264 theaters in 20 states, the District of Columbia and overseas, at about US$900-million. The company cited assets of US$1.84-billion in its Chapter 11 filing.

Formed by the merger of Cineplex Odeon Corp. and Loews Theatres Exhibition Group in 1998, the company operates under the Loews and Sony names and as Cineplex Odeon in Canada.

On Feb. 22 Loews' Canadian subsidiary, Cineplex Odeon Corp., and certain of its other Canadian subsidiaries, received approval for its reorganization plan in a vote of creditors, Loews said. Subject to a sanction hearing, Loews expects Cineplex Odeon will emerge from bankruptcy at the same time as the reorganization plan for Loews Cineplex becomes effective.