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Anschutz Close to Gaining Controlling Stake in Regal

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From Reuters

Billionaire investor Philip Anschutz is close to taking control of the No. 1 U.S. theater chain, Regal Cinemas Inc., from two major private equity firms, Kohlberg Kravis Roberts & Co. and Hicks Muse Tate & Furst, sources familiar with the deal told Reuters.

As part of the deal, which is in late-stage negotiations, Regal would file for a “prepackaged” bankruptcy action and seek court approval for an arrangement that would give Anschutz a 60% stake in Regal’s equity, the sources said.

Denver-based Anschutz Corp., Philip Anschutz’s investment vehicle, and Los Angeles investment firm Oaktree Capital Management, hold a majority of Regal’s $1.8 billion in long-term debt. Much of that debt would be converted into equity under the terms of the bankruptcy deal, according to the sources.

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The deal would enable KKR and Hicks Muse to wash their hands of a major disappointment that the firms jointly purchased in 1998 for $1.57 billion in cash and debt.

KKR, Hicks Muse, Regal and Anschutz declined to comment on any pending transaction involving Regal.

Like many theater chains, Regal in recent years went on a major expansion spree, making it the world’s largest theater chain with more than 4,000 screens.

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Regal and other cinema chains over-saturated the market at a time when box office receipts are dropping because of competition from ever-larger cable television companies and rising studio costs, which made movies more expensive.

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