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Carmike Cinemas files for bankruptcy protection

Wednesday, August 09, 2000

From wire and local dispatches

Carmike Cinemas Inc., the nation's third largest movie theater chain, filed for bankruptcy yesterday.

The Columbus, Ga.-based theater chain, which has 2,815 screens at 439 theaters in small and medium-sized cities, filed for protection from debtors under Chapter 11 of U.S. bankruptcy law to gain time to refinance its debt.

Carmike had assets of $815.8 million and debts of $516.4 million as of March 31, according to its last quarterly filing with the Securities and Exchange Commission.

It's too early to say what, if any, effect this will have on Carmike operations in Pittsburgh.

It bought Cinema World in 1994 and operates Carmike 10 at South Hills Village in Bethel Park, Galleria 6 in Mt. Lebanon, Cranberry 8, Southland 9 in Pleasant Hills, Maxi-Saver 12 in West Mifflin and Wynnsong 12 in Delmont.

Carmike has felt the pinch of increased competition from Loews, Destinta and Star City, all of which are new players here.

Although Carmike built the South Hills Village and Delmont theaters from scratch, it never bothered to remove the Cinema World carpet or name from its Southland location, and its Cranberry complex hasn't kept pace with the population boom.

Last week, Carmike shares lost more than half their value after one of the company's banks blocked a $9 million interest payment Carmike was to make Aug. 1 on senior notes.

The lender, which analysts have identified as Wachovia Corp., declared Carmike in default of its credit agreements because the company fell out of technical compliance with terms of its loans. That allowed it to block the payment.

The company's shares plummeted to a 52-week low of $1.31 before recovering slightly. Carmike shares rose about 3 percent, or 0.062 cents, yesterday to $2 on the New York Stock Exchange.

Carmike said it will stop developing new theaters, curtail its theater renovations, freeze expenditures and try to sell surplus assets. The bankruptcy will not affect operations of Carmike's existing theaters, spokeswoman Suzanne Brown said.

Banks such as Wachovia have been working to reduce its risk in the theater exhibition industry, which has been hit with a glut of new theaters that have outpaced demand, said Michael Florin, an analyst with Gerard Klauer Mattison and Co.

"This is more to do with the state of the industry than anything specific to Carmike," Florin said. "The banks are looking at the industry and getting nervous."

The Associated Press and Post-Gazette Staff writer Barbara Vancheri contributed to this report.

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