Canada Firm, 2 U.S Groups to Buy Plitt Chain

Toronto-based Cineplex Odeon Corp. and two United States investor groups have agreed to purchase the 600-screen Plitt movie theater chain based in Los Angeles. The $65-million acquisition will put the Canadian company in a dead heat with General Cinema as the largest operator of movie theaters in North America.

The purchase, announced Thursday in Toronto, is being made by a new company to be owned equally by Cineplex and a New York investor group comprised of Odyssey Partners, an investment firm, and Furman Selz Mager Dietz & Birney, a securities firm.

Cineplex owns 460 screens in the United States and Canada and will operate the Plitt theaters under the Plitt name.

The movie houses are being purchased from Plitt Theatres and Plitt Theatre Holdings, both of which are controlled by Henry Plitt, 65-year-old founder and chairman of the chain.

The addition of the Plitt circuit--fourth largest in North America--will put about 1,060 screens in 391 locations under Cineplex’s control.

Included are the two screens in Plitt’s Century City theater, Plitt’s only Los Angeles-area houses.

General Cinema, a diversified Chestnut Hill, Mass.-based company, operates 1,078 screens at 331 locations.

Garth Drabinsky, the 36-year-old president of Cineplex Odeon, said the total number of screens that Cineplex will operate will fluctuate as the company sheds some of Plitt’s theaters and continues to open new screens of its own.

For instance, two more screens are on tap at the Cineplex’s 14-screen complex at the Beverly Center, adding about 1,000 seats to the existing 12,000 seat capacity.

$12.5 Million in Cash

Drabinsky believes it won’t be long before Cineplex leads General Cinema.

“Certainly our expansion plans are more aggressive,” he said, explaining that combined current plans call for Plitt and Cineplex to be opening several screens each month for the next 18 months.

The total purchase price for the Plitt companies includes $12.5 million in cash and $17.5 million in notes. Also, real estate estimated at $35 million is to be sold, with the proceeds going to Plitt’s owners.

The real estate to be sold includes an estimated 30 to 35 movie screens in the Plitt chain.

Henry Plitt is majority owner of the movie-house chain. Other owners are Roy Aaron, president of Plitt Theatres, and investor Tom Klutznik. Plitt, who will remain with the Plitt chain as a consultant, is also involved with a new movie technology, called Showscan, that is believed to have the capability to improve the quality of movie projection.

As part of the deal, Cineplex assumes Plitt Theatre’s agreement to build 10 theaters equipped to use Showscan.

Cineplex Odeon reported income of $11 million Canadian in 1984, or $8.1 million U.S. at current exchange rates. In its first six months of 1985, it had income of $4.2 million Canadian ($3.1 million U.S.) on revenue of $73.4 million ($54.1 million U.S.).

Its shares were up 25 cents Canadian, to $10.25, when trading on the Toronto exchange was halted early Thursday pending the acquisition announcement.

Cineplex more than doubled its number of screens last year when it acquired the 297-screen Canadian Odeon Theaters chain. Until now, Cineplex’s U.S. presence has been limited to the Los Angeles area, where it operates the Beverly Center complex and owns the Fairfax, Brentwood and Gordon theaters.

The Plitt chain includes theaters of the old ABC-Paramount circuit, which Henry Plitt began acquiring in 1974. According to Cineplex’s announcement, the privately held Plitt companies had income of about $11 million on $168 million in revenue for its 1984 fiscal year.

However, the theaters lost $5 million in the first nine months of 1985 ended June 30 on revenue of $111 million.

Although no immediate cuts are anticipated in Plitt’s work force of 6,000, Drabinsky said a review of Plitt’s operations may result in future reductions.

Drabinsky also said the new company being formed to buy Plitt hopes to make a public offering of stock within 12 to 24 months of the scheduled Nov. 22 closing date of the acquisition.