Former Top IDC Executive Leads Buyout of AME Inc.

One of the businesses Lawrence J. Berkowitz ran as an executive with IDC Services, a casting and payroll services company for the entertainment and advertising industry, was Central Casting.

The venerable Hollywood institution is the company directors have called on since the early days of movie making when they needed extras. Now, Berkowitz has cast himself in a challenging role: head of Hollywood’s biggest videotape post-production house, AME Inc.

Last week, the New York investor led a group that will buy the Burbank company. They agreed to pay $57 million for AME’s 4.9 million shares of stock and assume about $42 million in AME’s outstanding debt.

For Berkowitz, 48, the sale marks a return to the entertainment business after more than a year as a New York-based private investor and consultant.

Television Executive

Berkowitz, a lawyer, worked as director of business affairs for Columbia Pictures’ television operation from 1974 to 1977, when he joined IDC. He ran IDC’s entertainment-related businesses and later was IDC’s chief executive until the company was sold to a group of former Viacom executives in 1988.

In AME, Berkowitz and his group are buying a young company that has already made a name for itself. AME was founded nine years ago by Andrew M. McIntyre and has become a giant in post-production work for movies and television.

AME mainly transfers film to videotape so movies and television shows can be mass-distributed. In addition to its Southern California operations, AME has facilities in New York and Canada.

The sale is an expensive one, and the Berkowitz group is taking on considerable debt. On top of the $100 million needed to buy the stock and refinance the debt is another $10 million for transaction fees. Nearly all of the money comes from two sources, First National Bank of Boston’s entertainment lending group and Citicorp Capital Investors Ltd.

AME Generates Cash

Berkowitz said AME generates a lot of cash that can be used to help reduce the debt. In addition, he said, he believes the company can cut costs.

AME’s facilities can be consolidated, he said. In Southern California alone, he said, AME has facilities in eight or nine locations. Berkowitz added that the company has about 150,000 square feet in excess space in the Los Angeles area that it can sell to raise money to pay off the loans.

“I feel very comfortable with the debt,” Berkowitz said.

Berkowitz said he sees a big opportunity for AME to move heavily into post-production work for the advertising industry, where he developed contacts while working for IDC.

AME mainly works for Hollywood now. Its dependence on the entertainment business showed when its earnings suffered last year in the wake of the 154-day strike by film and television writers. In the year that ended last Sept. 30, AME’s profit fell 22% to $3.2 million on revenue of $47.6 million.

Berkowitz is bringing in experienced AME management. Two members of his team are Larry Kingen, who resigned as president and chief operating officer this year, and Martin Katz, who was chief financial officer briefly this year.

Berkowitz, who will become chairman and chief executive of AME, said he plans to regularly consult with McIntyre. “He knows everything about this company,” Berkowitz said.

Approval Needed

McIntyre, AME’s chief executive, could not be reached for comment on his plans. As AME’s largest shareholder by far, with nearly half of the stock, McIntyre needed to approve the sale. “You couldn’t do this without his cooperation,” Berkowitz said.

McIntyre initially wanted to buy AME himself and tried to do so for four months late last year and early this year. In February, McIntyre dropped a $37-million bid to buy the 56% he did not already own because he was unable to find financing on terms he wanted. Berkowitz, who was a consultant to AME last year, then emerged as a suitor.

McIntyre’s stake is worth a hefty sum. He will be paid about $22 million, or $10 a share, for his 44% stake under an option that McIntyre sold to the Berkowitz group in April. In 1987, he sold 500,000 shares for $6.3 million as part of an initial public offering of AME stock.

The remaining shares, including about 25% owned by an employee stock plan, are to be bought by the Berkowitz group for $12.50 a share, or nearly $35 million.