Exhibition industry watchers wondered whether Regal still had an appetite for acquisitions in November, when it announced a $155M special dividend. But today’s deal, following Regal’s $250M bond offering in January, should put that question to rest. Hollywood Theaters, which has 43 venues with 513 screens, had been looking for help before June, when $157M of its bonds are due. The companies say that Regal’s $191M cash payment will cover that. The No. 1 exhibition chain also picks up $47M in lease obligations. Investors seem pleased by the deal, which increases Regal’s screen count by 7.5%: Its shares are up about 2% in early trading. Even with the outlay, “Regal is well-positioned to once again generate results above expectations in 2013 driven by its leading industry position on a robust film slate (with higher 3D penetration) along with a well-capitalized balance sheet to take advantage of additional M&A opportunities,” B. Riley Caris’ Eric Wold says. Here’s today’s release:
KNOXVILLE, Tenn.– Regal Entertainment Group (NYSE: RGC), a leading motion picture exhibitor owning and operating the largest theatre circuit in the United States, today announced that it has entered into an agreement to acquire Hollywood Theaters. The purchase price will consist of $191 million in cash, approximately $47 million of assumed lease obligations, comprised of capital leases and financing obligations, and certain working capital. The cash portion of the purchase price includes repayment of approximately $157 million of the sellers’ debt and is subject to customary post-closing adjustments.
The proposed acquisition would add a total of 43 theatres with 513 screens to Regal’s portfolio at a pre-synergy multiple of approximately 5.9 times cash flow and includes theatres in 16 states and 3 U.S. territories. The consummation of the acquisition is subject to customary closing conditions.
“We expect the acquisition of Hollywood Theaters to be accretive to cash flows and earnings and are pleased to announce an agreement to purchase these high quality assets,” stated Amy Miles, CEO of Regal Entertainment Group. “Accretive acquisitions are a key component of our overall business strategy and we look forward to a successful closing and integration of the Hollywood Theater assets during the second quarter,” Miles continued.


Since Regal has so much money to spend, I hope they can throw a couple of dollars at their Lynbrook sixplex, which has plenty of broken seats and doesn’t even have cup holders. They’ve been “planning” to rebuild for over a decade and so have spent very little on repairs and maintenance. Since their new purchase is expected to be “accretive to cash flows” I hope some of that cash flows this way.
A nice way to spend all that cash that these “struggling” exhibition chains have laying around would be to raise the pay of their employees, even by a dollar or two. As a former theater employee, I can attest to the attrocious pay for long hours and back-breaking work; and the fact that the average concession stand transaction yields more cash from the customer than the employee will make in 4 hours of work. Depressing.
Even worse is when certain theatre locations refuse to pay for parking passes for their employees, forcing them to have to move their cars every couple of hours to avoid a ticket, or struggling to find far-away street parking and walk to work (I’m looking at you, AMC Century City 15). And of course, when the parking deck is crowded and you have trouble finding something, you’re penalized for being late.
C’mon…everybody knows the power of cinema. My first job was at an an old second run twin theater operated by Eastern Federal. It was only a dollar to get in but to go watch a movie with your friends for free was still awesome and it raised my status level a few points. Hard work? It was and will always be the easiest job I’ve ever had. As a matter of fact, after putting in 29 years with various theater companies, I still work a few hours a week now even though my first job with pharmaceuticals pays the bills. All in all, I’ve accumulated over 5000 movie posters, friends across the cinema circuit and of course, free movies. This Regal Aquisition will be the third theater worked for that has been taken by Regal.