Edwards Theatres to Seek Court Approval to Break Imax Leases

Edwards Theatres Circuit Inc., which has shed movie houses that have been a drain on the Newport Beach chain, is moving to break contracts that could lead to closing six Imax theaters, including three in Southern California.

Edwards, which is trying to reorganize its debts under Bankruptcy Court protection, and Imax Corp. said they have failed to negotiate a settlement on Imax’s claims for $29 million owed in licensing fees under the contracts.

Both sides say they will seek Bankruptcy Court approval to scrap the lease contracts.

Court approval, however, doesn’t mean that the theaters will be closed. Edwards won court approval last August to get out of the lease at the Lido theater in Newport Beach, but is still operating it.

The large-screen Imax theaters that could be closed are at Irvine Spectrum center in Irvine, Ontario Mills shopping center in Ontario, Valencia, Fresno, Houston and Boise, Idaho.

Under its plan, which is the subject of a court hearing Friday, Edwards would raise $56 million by selling a 51% stake to an investor group led by Denver financier Philip Anschutz.

The plan calls for paying $213.5 million, the total amount owed, to a consortium of lenders headed by Bank of America and repaying other creditors 90% to 100% of their claims, provided those claims don’t exceed $113 million.

But Edwards, the state’s largest movie house operator, has hit bumps as it seeks creditor and court approval of its reorganization plan.

Edwards contends that the debt claimed by Imax isn’t legitimate and that the Imax theaters are not drawing enough customers.

Edwards’ lawyer, Eric Goldberg, said if the court allows the company to break the contracts, Edwards will close the Imax theaters and probably convert them to conventional movie houses.

Imax, however, contends that some of the theaters are successful. The Spectrum Imax was once one of its highest performers, but the numbers have now “tailed off somewhat,” said Richard L. Gelfond, Imax co-chairman and co-chief executive.