Production of new movies at historic RKO Pictures was halted Thursday by owner Gencorp, which said a $48-million sale of the subsidiary to a management group fell through because of failure to arrange the financing.
Gencorp, an Akron, Ohio-based aerospace firm, said it would "begin again" to seek buyers for the firm and its 750-film library, which is by far its chief asset. The library includes various rights to mostly pre-1955 films, including "Citizen Kane," "King Kong," "The Hunchback of Notre Dame" and "Top Hat."
RKO's long-dormant movie production was resumed in recent years with conspicuous lack of success at the box office.
A small part of the money for the intended purchase was to be put up by several RKO Pictures executives and their backers, Alan J. Hirschfield and Robert Fell. Hirschfield is former chief executive at Columbia Pictures and 20th Century Fox Film Corp. and Fell is a business consultant.
Management to Stay On
The price and financing details, as reported by The Times last March, were given in an "informational memorandum" prepared by New York investment banker Paine Webber Inc., which was seeking to sell $30 million of convertible preferred stock in a private placement as part of the purchase financing.
The buyers had also intended to obtain a $38-million term loan and a $14.3-million revolving credit to go with a $2.5-million equity investment by the intended buyers. The company had sought about $39 million above the purchase price as working capital, according to the data at that time.
Mark Seiler, president of RKO Pictures and a member of the management buyer group, could not be reached. His office referred inquiries to RKO General, the Gencorp-owned parent organization in New York.
Monie Begley, a spokeswoman there, said senior management would be staying on to run the operation while new buyers are sought. She declined to say how many persons would be laid off, but noted that the production firm has only about 50 employees.
RKO General President Pat Servodido later said that RKO Pictures will not take on any new movie projects but will "maintain an operation to meet our obligations." He said these include the coming summer release of its "Hamburger Hill" by Paramount Pictures.