Anschutz, Partner to Get 51% of Edwards

Billionaire Philip Anschutz and an investment partner have agreed to pay $56 million to take control of Edwards Theatres Circuit Inc., the state’s largest cinema chain, according to a bankruptcy reorganization plan filed Thursday.

Under the plan, Anschutz and an equity fund managed by Oaktree Capital Management, a Los Angeles distressed-debt specialist, would own 51% of the reorganized company. Members of the Edwards family, which has controlled the business for more than seven decades, would own 49%.

Analysts previously put the theater chain’s value at almost $300 million, although an attorney for the company said Thursday that it is worth substantially more than that. But the company’s debts are likely to surpass $300 million.

Chief Executive James Edwards III would move aside, becoming vice chairman. He would be paid $300,000 a year plus benefits.

In addition, Edwards and his sisters, Carole Ann Ruoff and Joan Edwards Randolph, would each receive $200,000 a year, plus health insurance and auto expenses, for five years for agreeing to not launch a competing cinema business, the reorganization documents disclosed.

It was unclear who will head the chain. Stephen Coffey, the president, was expected to serve as chief executive until a new leader is named.

The restructured company will be governed by a seven-member board consisting of James Edwards III and directors designated by Anschutz and Oaktree and by the Edwards family. Anschutz and Oaktree will control the board, sources said.

Anschutz, Oaktree and Edwards executives could not be reached for comment.

In a statement released Thursday, James Edwards III said the Newport Beach chain could emerge from bankruptcy as early as October as a “stronger, more profitable and competitive company.”

Anschutz, whose expanding empire includes the Kings hockey team, most of Staples Center and part of the L.A. Lakers, also owns a majority stake in United Artists Theatre Co., a nationwide chain that filed for bankruptcy protection last year. He also is trying to take control of struggling Regal Cinemas Inc., the nation’s largest exhibitor.

Edwards, with its 59 theaters and 690 screens, is smaller than those companies but would be a prized addition to a theater empire because of its flashy megaplexes and Southern California stronghold, industry insiders have said.

Anschutz would have control of more than one-fifth of the nation’s theater screens if he gains majority stakes in Edwards and Regal.

Edwards had 70 theaters at the time it filed for bankruptcy protection, but it has been closing unprofitable theaters. Insiders say more are likely to close, but the company declined to comment on additional closures Thursday.

Creditors are pleased with the reorganization plan, said attorney Jeffrey Reisner, who represents unsecured creditors.

The company’s largest creditor, a consortium of lenders headed by Bank of America, will be paid the full amount it is due--$213.5 million plus interest and professional fees. Anschutz and Oaktree have bought $25 million of the bank group’s debt, sources said.

Other creditors would be paid between 90% and 100% of their claims, provided those claims don’t exceed $113 million, said Edwards attorney Robert Greenfield.

Edwards is one of many movie house chains that ran into financial difficulty after a five-year building spree left them with too many screens and too much debt. The company filed for bankruptcy protection in August.

A hearing on the reorganization plan is scheduled for June 29. After that, the plan must be approved by creditors. It then would be submitted to bankruptcy Judge Lynne Riddle for final approval.