Loews Files Chapter 11 Recovery Plan

Loews Cineplex Entertainment Corp. has filed a Chapter 11 recovery plan that would give Onex Corp. and Oaktree Capital Management control of the second-largest movie theater chain and allow the company to emerge from bankruptcy.

Loews filed in February for Chapter 11 protection from creditors and agreed to be acquired by Toronto-based Onex and Los Angeles-based Oaktree for about $850million. The New York company filed its plan Sunday in U.S. Bankruptcy Court in Manhattan. The plan requires court approval.

Under the plan, holders of more than $742million in bank loans to the company would get 100% of Loews’ reshuffled shares and more than $429million in new notes as payment for their claims. The company’s unsecured creditors, including bondholders owed about $313million, would divide $45million in cash under a settlement with lenders. Shareholders would receive no distribution.

“The plan represents a compromise between the divergent viewpoints” of different groups of creditors about the value of Loews and how creditors will be paid, the company said in the court filing.

Onex and Oaktree together hold about $300million in bank loan claims and more than $177million of Loews’s 8.875% bonds due 2008, court papers show.

Loews is among more than half a dozen theater chains to declare bankruptcy since 1999. The industry is suffering from a construction glut of so-called megaplex theaters, analysts say.

The plan values Loews, with more than 2,400 screens at 264 theaters in 20 states, the District of Columbia and overseas, at about $900 million.

The company is the No.2 movie theater chain behind Regal Cinemas Inc., which last month filed for Chapter 11 protection.

Shares of Loews, with $903.5million in 2000 sales, rose 1 cent to 16 cents on Monday.