Creditors set to gain Panavision

Ronald O. Perelman is handing over Panavision Inc., the debt-laden camera rental company that is suffering from a steep downturn in movie and TV production, to its creditors.

Perelman’s holding company, MacAndrews & Forbes Holdings Inc., has reached an agreement in principle with a group of creditors -- including Cerberus Capital Management, the former owner of Chrysler -- for the billionaire investor to give up his controlling stake in the camera maker that has been a fixture on movie sets for decades, according to people familiar with the matter.

The financial restructuring would cut Panavision’s debt by $140 million and give it an additional $40 million in new financing. After the deal, Perelman would no longer have any equity in the company.

“This will ultimately benefit Panavision by reducing its debt load and providing fresh capital for growth,” said a person close to the situation who requested anonymity.

Panavision had been seeking to refinance $285 million in loans that mature in March 2011 in the face of a severe slowdown in camera and equipment rentals for feature films and commercials.

Moody’s Investors Service downgraded Panavision’s corporate debt rating last September, citing “weak liquidity” and concerns about the state of its core camera business. The restructuring would extend the maturity on the loans to 2014.

Perelman, best known for his controlling stake in cosmetics giant Revlon Inc., took control of the company in 1998 in a complex deal that saddled Panavision with nearly $500 million in debt.

Three years later, the financier attempted to have another company he controlled, M&F Worldwide Corp., buy his 83% stake. But minority M&F stockholders opposed the move, fearing that it would dilute the value of their shares.

Like prop houses and other companies in the Hollywood supply chain, Panavision has been hammered by the sharp drop in production that began during the 2008 Hollywood writers strike and the subsequent standoff between the major studios and the Screen Actors Guild. Then just as Hollywood began to regroup after the strike, the recession hit, leading studios to make fewer movies and advertisers to cut back on making commercials, slackening demand for filmmaking equipment.

People close to Panavision say camera and lens orders for feature films, which account for most of the company’s revenue, fell about 15% last year. The company’s annual revenue for the fiscal year that ended June 30, 2009, was about $260 million, according to Moody’s. The privately held company does not disclose its finances, but one person with knowledge of the company’s finances said it still generated an operating profit.

Panavision, which employs 1,200 people, including 300 in Woodland Hills, manufactures cameras, lenses and accessories, but it doesn’t sell them. Instead, the company leases them to studios as well as film and TV production companies through a network of distributors.

Although Panavision remains the market leader, it faces mounting competition from upstart rivals such as Red Digital Cinema, a company that makes low-cost digital cameras.

The pressure to improve results has led to a series of management shake-ups.

Last year, Perelman ousted Bob Beitcher, who had been chief executive since 2003, after the two sparred over how to turn the business around.

Beitcher, in turn, was succeeded by Billy Campbell, a former president of Discovery Networks. But Campbell was on the job for just a couple of months before Perelman replaced him in June with the current CEO, William C. Bevins, a longtime associate of Perelman’s.

A former chief financial officer for Turner Broadcasting System Inc., Bevins also previously ran New World Communications Group Inc. and Marvel Entertainment Group Inc.

Bevins is expected to remain at the helm of the company.

Perelman’s Hollywood holdings also include Deluxe Entertainment Services Group Inc., a provider of production and post-production services, which is not affected by the financial restructuring.

richard.verrier@

latimes.com